Rachel Luna

 When you buy a property, you want to be sure that it's free of any debt and lien. This is where title insurance comes in. You don't want to wake up one day, and your pool is torn down because it was built over a utility easement. Or the heir of the seller comes in and reclaims what is theirs. Title companies prevent these things from happening. Join your host, Keith Baker, and his guest, Rachel Luna, on the importance of title insurance. Rachel is the Agency Development Manager of Patriot Title. As The Texas Title Queen, she drops a ton of knowledge and discusses the parts of a title policy, what is covered, what is not covered, and why you need title insurance when you purchase a property. Learn the schedules of a title property and why title insurance is a must. If you're a lender, you better listen to this episode.---Know The History Of Your Property With Title Insurance With Rachel LunaThe Texas Title Queen Breaks It Down For Lender NationI would like to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. If you want to learn from my mistakes so that you can both avoid them and profit from them, then pull up a chair and pour yourself a drink, my friend, and take some notes because this show is for you. I'm dedicated to giving people, like you and me, the knowledge and confidence for successful and profitable private lending.In this episode, I sit down and talk with the Texas title queen, Rachel Luna from Patriot Title Company, who has graciously agreed to come on this episode and drop a ton of knowledge around the topic of title insurance, what it covers, what is not covered and where to find things in the policy. Before we get to the heart of this episode, first, a little bit of housekeeping, number one, I'm about to lose my voice. The kids had a soccer tournament. They won the first two games and lost in the third. However, it was exciting. It was a blood pressure event. It was a good tournament. I’m proud of the kids but I shot my voice. I threw it out. Rather than waiting, I figured, “I'm going to make everybody suffer with me.” That's the first bit of housekeeping.The second bit of housekeeping is, have you joined the Private Lender Podcast Facebook group? If you haven't, why the hell not? Simply search in Facebook Groups for Private Lender Podcast, click on Join. Answer a few questions to let me know that you are a private lender and not looking for deals or looking for money and not looking to boost up your groups, but going to help add value to the community. Answer those questions, I'll let you in and then let you get started. While you're at it, head on over to PrivateLenderAcademy.com and click on Apply Now to learn more about putting the power of the banking system into your investment accounts or get some one-on-one time with me, I can answer your questions and show you my mistakes. That's PrivateLenderAcademy.com/apply.The housekeeping is finished and now it's time to get to the heart of this episode. Our guest has been providing title insurance and escrow services for Houston area investors for about as long as I can remember. I caught up with Rachel Luna at the FlipCo Financial Meetup and was excited that she agreed to come on and talk about title insurance. For the simple reason, everyone, including me that says that you must have it, but very few people understand why you need it. I'm going to let Rachel answer that for you. I think you're going to enjoy this. She is dynamite. She is Miss Personality. She has a pistol, a load of fun, is very energetic, knowledgeable and smart. I'm going to let her get down to the brass tacks of this episode and let's get to the interview with Rachel Luna from Patriot Title.---Lender Nation, I want you to buckle up because we're going to have a fun conversation about a boring topic. Our guest is coming and is going to bring all the enthusiasm and the excitement into something that nobody or very few lenders even think about and that is title insurance, exceptions, exclusions and endorsements. Welcome to the show.Rachel Luna here from Patriot Title. It's going to be an amazing show with some amazing information with some boring topics.I can't thank you enough. You are the perfect person to come on and talk about this because you're going to bring life to it. You already have just started with this. Let's talk about you for a moment before we get into the doldrums and the coffee stuff. Tell us about you. How did you become the Rachel Luna?[bctt tweet="Title insurance is there to protect you from legalities that will forbid you from your goal." username=""]The Texas Title Queen, as they call me or The Title Queen. I started this business many years ago. I was passionate about it and being able to help people grow their business in real estate and help along the way people accomplished one of the biggest dreams and purchases of their life. If it's not investing, it's purchasing their home for the first time or transacting a sale. Being able to be the end part of that transaction at the title company, helping people protect their investments, but also be a part of their investment.I believe that as a title company and what we do is it's a very important piece of the whole puzzle. I love that being that piece and I love how every transaction is different. Every single day is different. Every client is different. This business has been nothing but learning and that's why I'm here. They call me the queen because I’ve self-educated, learned, evolved with this business and come out with solutions that can help all parties and all professionals in the real estate business in general, to help grow in their knowledge in real estate, but their knowledge and title and why it's so important. That's why we're here.We only met in person after the COVID thing, but I have seen you around in the Houston area for years helping investors and homeowners. In fact, Rachel has a new branch, so they're expanding. Is business good?Business is good. I'm expanding in Woodlands. This is going to be our Woodlands location. We're off of Sawdust over here and 45. We're in a conference and there's not much going on in here because we're setting up IT and getting phones implemented. We have a new conference room. We're getting this set up. There are computers over here on the floor. We're setting up stuff. It's a new shop, but it's all a process. I'm excited. I love opening up a new location to service and expand for our customers out there who need us in other areas of town.Congratulations. That's good news to hear. Let's start off with what is title insurance? I demand it as a lender. I always demand a lender policy. Explain why am I crazy?[caption id="attachment_3198" align="aligncenter" width="600"] Title Insurance: Title insurance exists to protect your investment. If you're someone purchasing a property, you want to know what is on that property. It protects you from many other different variables.[/caption] No, you're not crazy. You're being a smart man. I advise all to do the same. Title is protecting your investment. We do our due diligence from the sovereignty of a property. If you're a lender and giving money out to someone or if you're someone purchasing a property, you want to know what is on that property. Just because you see the person who signed the contract is the person that's registered in the CAD or the tax records and their name is on that. Let's use Harris County, Montgomery County, or Tarrant, it says, “XYZ person.” They're on the tax roll there and they're on the CAD and they signed the contract, it doesn't mean they're the only person that's entitled to that property or there are not any other issues.What it does is protect the consumer, the lender and all parties of the transaction because you don't know what exactly is going on with an individual, their personal finances or if they're filing for bankruptcy. There are so many variables I can go on and on why you need title insurance to protect yourself. Your money or investment or purchase could be in legality that will forbid you or not allow you going forward to sell the property, do a refinance cash out on that property because there might be some other encumbrances that prevent that in title that was not caught because there was no insurance and due diligence done prior to.It protects you because there are so many variables. In Texas, especially because it's a community property state as well. That's another wrench in there but there are so many variables of why a property can get. It could be an insurable, number one, but it could also be a bad investment when you thought it was a good investment. That's preventing bad investments. Why do you get titles? It’s to prevent a bad investment, is the bottom line.Texas being a community property state, that divorce may not be final. That spouse may have a legal right of 50% of that property or a son or daughter. The black sheep of the family could come back all of a sudden say, “That was granddaddy's house and I'm entitled to something from it.”“There's an interest that belongs to me. Where is it? Why didn't I get paid? Who sold this? Where's my money?” Go to the title company, but no. If you don't have title insurance, you're like, “You owe me money,” and then there could be the whole legality. That was what, at the end of the day, ended up being a bad investment that could have been prevented. At the end of the day, if you're asking me, why do you need title insurance? It’s to prevent you from making a bad investment.For one, I don't pay it. The borrower does. That's better, but it is a small price to pay to avoid letting your money be held hostage. Getting into that, we've got to clear up this title. It's going to take the lawyers a couple of years, “No. I only loaned it for six months.” I can foreclose all I want. It doesn't matter. I won't have clear title to that property if I have to foreclose. For me, it's avoiding holding your money hostage.You want to make money on your money, not have it tied up in legalities because of not being informed or not doing your due diligence. Not allowing a third party, like the title company to do the due diligence to protect your investment, to protect you so you can get your money to be in and out and move onto the next project, borrower or whatnot.That's the beauty. If there is something that's missed, that’s why there is title insurance. It’s to remedy the situation and make everybody whole.[bctt tweet="A property should be clear of debts and liens for the new consumer." username=""]That's why the title company does its job. In the case that there is, you're insured, protected and that's why the title companies have underwriters. That's why they're an insurance company. That's why you pay them to protect you and then fix the wrong. It gives you the mind.For everyone, a title company is no different than any other insurance company. They're going to be regulated by the state, whatever state they're in. They're going to have to follow the rules. They're probably going to have standard forms from that state that they use, at least to get started and then things change and go in all other areas. That's what we're going to go into all other areas. When my borrower finds a property and I agree to borrow, he opens the title. He begins the title search with Patriot Title and then we get a title commitment.That title commitment is going to talk about any exceptions that won't be covered in insurance. There are exceptions and also exclusions. Anyone who has an auto policy or a home owner's policy is going to know that certain things are going to be excluded. Radioactive waste coming from your garage would be excluded from a homeowner's policy, for example. When you get a title commitment, the title company had gone through, done their research and due diligence and said, “We can trace it all the way back to sovereignty,” which I like to say is when we stole it from Mexico or the Indians, either way, you want to look at it.Whenever we say, “We're putting a fence around this land and I'm calling it mine.” You go all the way back. You get a title commitment and there are certain things that the title won't cover. If somebody hasn't paid back taxes, for example, the title doesn't come in and step into that. As part of the closing process, the title company ensures that those taxes are paid or deferred, however, credit is given to the buyer. The bottom line is those taxes are going to be handled at closing such that exceptions will come into play. Before we got on the line, I had a bit of a thought about this.It's like, “The property is being conveyed clear of debts and liens for the new borrower.” The title company at closing will ensure and assure the lender and the new purchaser that the property that they're receiving is going to be free and clear of debt and lien and not to exclude taxes, HOA, any other underlining lien holders that might be on the title, or that might have any derogatory authority to foreclose that would affect the new owner. We make sure that all debts and liens are paid in full so the new borrower who's getting the property is receiving it with only their new lienholder or obviously as a free and clear investment to pay in cash. We do ensure that all debts are paid in full upon conveyance. Conveyance is transfer title.Conveyance means a transfer of title from one party to another or one person to another or entity. Another example is conveyance or the right of possession if the house is sold, and let's say there's a tenant or a renter in it. That new owner has to honor the lease that the tenant is under until the completion of that. However, if there's a problem with that title that is like, “It has nothing to do with the title of the property. That's the property.” That is an exception to anything as well.Tenants, anything with the physicality of the property in reference to being a landlord type of situation. Our insurance is only to protect the title, the actual debt in the lien, the conveyance of a predecessor-to-predecessor, owner to owner throughout the years, to make sure that every owner conveyed that property without any debt or lien or clouds in the title. A conveyance is a very clean and clear pass-through of the owner to owner throughout the years. We're here to ensure that no one from many years ago was going to come and have some right to your property that you purchased here many years later.We make sure that all of that is a clear conveyance of title throughout the years for you, the end buyer and owner, to have a good title. In reference to somebody living in the shack behind the house, we have nothing to do with it. That's something that's negotiated in the contract process. We are here to show the history, the debt and the ownership conveyance. The ownership lineage of title now in reference to who lives there and how or damage that’s contract stuff.You don't care about the use of the property. It's just the conveyance of the title.Also, the deb. That there's nothing there that's going to come back and the paperwork.Wells Fargo is not going to come back and say, “We're going to foreclose now. I don't care if you just bought it.” That's not going to happen.[caption id="attachment_3199" align="aligncenter" width="600"] Title Insurance: The person who signed the contract is the owner of the property. Someone who isn't the owner can't sell it, so look at schedule A to know who the owner is.[/caption] We made sure Wells Fargo got paid off in full. That's what we do. Some exclusions are he's talking about this vision, which would have been landlord stuff, but it would be some of the city stuff. Some of your exclusions to title would be city easements, some right of ways that the property might be backed up to a utility right away. Those are some of the things that are excluded in the title because of the fact that the utility districts and the counties have the right to do what they need to do for the community.If your property happens to fall in an easement, then that would be excluded from your title. We cannot ensure that the city won't come in on your property and dig up an easement or something to put new pipes or new fiber optics that might affect your property. That would be considered an exclusion. Those are usually on Schedule B. I’m discussing Schedules, A, B, C, and D.Let’s run through the schedules of a title policy.As we left off, you open the title, then we get the title back. The title commitment is ready from Patriot Title, and we send you out your title commitment. Your title commitment is ready. Here's a copy of the tax certificates, the preliminary taxes of what we've found. These are all our findings. This is what we do. This is our due diligence. The commitment I consider was like your Bible of what we do in due diligence. It's going to have everything on that commitment and the tax certs. This is what we're based on in our due diligence. This is all our research available now.Schedule A is going to show you basically who is purchasing it. That would probably be yourself or your client, who the lender is, who's lending the money. If they ask us to put it on that front Schedule A and what their loan is going to be for based on the contract that you provided us. At the very bottom, it's going to disclose who the vested owners are. Why that's so important is that it has to be the same person who signed the contract. Why?Because someone who signs a contract has to be an owner of the property, let’s say Gerald Jr. signed it, but it's Gerald Sr. who's the owner of the title. Gerald Jr. is not the owner. Gerald Sr. is, so Gerald Jr. should not be selling this property or doesn't have rights to sell that property as it states in the title at this point. There could be some variables that may be Gerald Sr. died and now he's an heir. We're going to a whole different spectrum of things.It's important that you look at Schedule A because it tells you who is the seller and if that person who sold it is the same person that signed your contract and/or is there someone else that's on the ownership as well as the person that's under contract?...

When you buy a property, you want to be sure that it's free of any debt and lien. This is where title insurance comes in. You don't want to wake up one day, and your pool is torn down because it was built over a utility easement. Or the heir of the seller comes in and reclaims what is theirs. Title companies prevent these things from happening. Join your host, Keith Baker, and his guest, <a href="https://www.linkedin.com/in/rachel-luna-39a0436/" rel="nofollow" target="_blank">Rachel Luna</a>, on the importance of title insurance. Rachel is the Agency Development Manager of <a href="https://www.patriottitletx.com/" rel="nofollow" target="_blank">Patriot Title</a>. As The Texas Title Queen, she drops a ton of knowledge and discusses the parts of a title policy, what is covered, what is not covered, and why you need title insurance when you purchase a property. Learn the schedules of a title property and why title insurance is a must. If you're a lender, you better listen to this episode.---<h2>Know The History Of Your Property With Title Insurance With Rachel Luna</h2><h3>The Texas Title Queen Breaks It Down For Lender Nation</h3>I would like to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. If you want to learn from my mistakes so that you can both avoid them and profit from them, then pull up a chair and pour yourself a drink, my friend, and take some notes because this show is for you. I'm dedicated to giving people, like you and me, the knowledge and confidence for successful and profitable private lending.In this episode, I sit down and talk with the Texas title queen, Rachel Luna from <a href="https://www.patriottitletx.com/" rel="nofollow" target="_blank">Patriot Title Company</a>, who has graciously agreed to come on this episode and drop a ton of knowledge around the topic of title insurance, what it covers, what is not covered and where to find things in the policy. Before we get to the heart of this episode, first, a little bit of housekeeping, number one, I'm about to lose my voice. The kids had a soccer tournament. They won the first two games and lost in the third. However, it was exciting. It was a blood pressure event. It was a good tournament. I’m proud of the kids but I shot my voice. I threw it out. Rather than waiting, I figured, “I'm going to make everybody suffer with me.” That's the first bit of housekeeping.The second bit of housekeeping is, have you joined the Private Lender Podcast Facebook group? If you haven't, why the hell not? Simply search in Facebook Groups for <a href="https://www.facebook.com/groups/674936429994760/" rel="nofollow" target="_blank">Private Lender Podcast</a>, click on Join. Answer a few questions to let me know that you are a private lender and not looking for deals or looking for money and not looking to boost up your groups, but going to help add value to the community. Answer those questions, I'll let you in and then let you get started. While you're at it, head on over to <a href="http://www.PrivateLenderAcademy.com" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a> and click on Apply Now to learn more about putting the power of the banking system into your investment accounts or get some one-on-one time with me, I can answer your questions and show you my mistakes. That's <a href="http://www.PrivateLenderAcademy.com/apply" rel="nofollow" target="_blank">PrivateLenderAcademy.com/apply</a>.The housekeeping is finished and now it's time to get to the heart of this episode. Our guest has been providing title insurance and escrow services for Houston area investors for about as long as I can remember. I caught up with Rachel Luna at the FlipCo Financial Meetup and was excited that she agreed to come on and talk about title insurance. For the simple reason, everyone, including me that says that you must have it, but very few people understand why you need it. I'm going to let Rachel answer that for you. I think you're going to enjoy this. She is dynamite. She is Miss Personality. She has a pistol, a load of fun, is very energetic, knowledgeable and smart. I'm going to let her get down to the brass tacks of this episode and let's get to the interview with Rachel Luna from Patriot Title.---Lender Nation, I want you to buckle up because we're going to have a fun conversation about a boring topic. Our guest is coming and is going to bring all the enthusiasm and the excitement into something that nobody or very few lenders even think about and that is title insurance, exceptions, exclusions and endorsements. Welcome to the show.Rachel Luna here from <a href="https://www.patriottitletx.com/" rel="nofollow" target="_blank">Patriot Title</a>. It's going to be an amazing show with some amazing information with some boring topics.I can't thank you enough. You are the perfect person to come on and talk about this because you're going to bring life to it. You already have just started with this. Let's talk about you for a moment before we get into the doldrums and the coffee stuff. Tell us about you. How did you become the Rachel Luna?[bctt tweet="Title insurance is there to protect you from legalities that will forbid you from your goal." username=""]The Texas Title Queen, as they call me or The Title Queen. I started this business many years ago. I was passionate about it and being able to help people grow their business in real estate and help along the way people accomplished one of the biggest dreams and purchases of their life. If it's not investing, it's purchasing their home for the first time or transacting a sale. Being able to be the end part of that transaction at the title company, helping people protect their investments, but also be a part of their investment.I believe that as a title company and what we do is it's a very important piece of the whole puzzle. I love that being that piece and I love how every transaction is different. Every single day is different. Every client is different. This business has been nothing but learning and that's why I'm here. They call me the queen because I’ve self-educated, learned, evolved with this business and come out with solutions that can help all parties and all professionals in the real estate business in general, to help grow in their knowledge in real estate, but their knowledge and title and why it's so important. That's why we're here.We only met in person after the COVID thing, but I have seen you around in the Houston area for years helping investors and homeowners. In fact, Rachel has a new branch, so they're expanding. Is business good?Business is good. I'm expanding in Woodlands. This is going to be our Woodlands location. We're off of Sawdust over here and 45. We're in a conference and there's not much going on in here because we're setting up IT and getting phones implemented. We have a new conference room. We're getting this set up. There are computers over here on the floor. We're setting up stuff. It's a new shop, but it's all a process. I'm excited. I love opening up a new location to service and expand for our customers out there who need us in other areas of town.Congratulations. That's good news to hear. Let's start off with what is title insurance? I demand it as a lender. I always demand a lender policy. Explain why am I crazy?[caption id="attachment_3198" align="aligncenter" width="600"] Title Insurance: Title insurance exists to protect your investment. If you're someone purchasing a property, you want to know what is on that property. It protects you from many other different variables.[/caption] No, you're not crazy. You're being a smart man. I advise all to do the same. Title is protecting your investment. We do our due diligence from the sovereignty of a property. If you're a lender and giving money out to someone or if you're someone purchasing a property, you want to know what is on that property. Just because you see the person who signed the contract is the person that's registered in the CAD or the tax records and their name is on that. Let's use Harris County, Montgomery County, or Tarrant, it says, “XYZ person.” They're on the tax roll there and they're on the CAD and they signed the contract, it doesn't mean they're the only person that's entitled to that property or there are not any other issues.What it does is protect the consumer, the lender and all parties of the transaction because you don't know what exactly is going on with an individual, their personal finances or if they're filing for bankruptcy. There are so many variables I can go on and on why you need title insurance to protect yourself. Your money or investment or purchase could be in legality that will forbid you or not allow you going forward to sell the property, do a refinance cash out on that property because there might be some other encumbrances that prevent that in title that was not caught because there was no insurance and due diligence done prior to.It protects you because there are so many variables. In Texas, especially because it's a community property state as well. That's another wrench in there but there are so many variables of why a property can get. It could be an insurable, number one, but it could also be a bad investment when you thought it was a good investment. That's preventing bad investments. Why do you get titles? It’s to prevent a bad investment, is the bottom line.Texas being a community property state, that divorce may not be final. That spouse may have a legal right of 50% of that property or a son or daughter. The black sheep of the family could come back all of a sudden say, “That was granddaddy's house and I'm entitled to something from it.”“There's an interest that belongs to me. Where is it? Why didn't I get paid? Who sold this? Where's my money?” Go to the title company, but no. If you don't have title insurance, you're like, “You owe me money,” and then there could be the whole legality. That was what, at the end of the day, ended up being a bad investment that could have been prevented. At the end of the day, if you're asking me, why do you need title insurance? It’s to prevent you from making a bad investment.For one, I don't pay it. The borrower does. That's better, but it is a small price to pay to avoid letting your money be held hostage. Getting into that, we've got to clear up this title. It's going to take the lawyers a couple of years, “No. I only loaned it for six months.” I can foreclose all I want. It doesn't matter. I won't have clear title to that property if I have to foreclose. For me, it's avoiding holding your money hostage.You want to make money on your money, not have it tied up in legalities because of not being informed or not doing your due diligence. Not allowing a third party, like the title company to do the due diligence to protect your investment, to protect you so you can get your money to be in and out and move onto the next project, borrower or whatnot.That's the beauty. If there is something that's missed, that’s why there is title insurance. It’s to remedy the situation and make everybody whole.[bctt tweet="A property should be clear of debts and liens for the new consumer." username=""]That's why the title company does its job. In the case that there is, you're insured, protected and that's why the title companies have underwriters. That's why they're an insurance company. That's why you pay them to protect you and then fix the wrong. It gives you the mind.For everyone, a title company is no different than any other insurance company. They're going to be regulated by the state, whatever state they're in. They're going to have to follow the rules. They're probably going to have standard forms from that state that they use, at least to get started and then things change and go in all other areas. That's what we're going to go into all other areas. When my borrower finds a property and I agree to borrow, he opens the title. He begins the title search with Patriot Title and then we get a title commitment.That title commitment is going to talk about any exceptions that won't be covered in insurance. There are exceptions and also exclusions. Anyone who has an auto policy or a home owner's policy is going to know that certain things are going to be excluded. Radioactive waste coming from your garage would be excluded from a homeowner's policy, for example. When you get a title commitment, the title company had gone through, done their research and due diligence and said, “We can trace it all the way back to sovereignty,” which I like to say is when we stole it from Mexico or the Indians, either way, you want to look at it.Whenever we say, “We're putting a fence around this land and I'm calling it mine.” You go all the way back. You get a title commitment and there are certain things that the title won't cover. If somebody hasn't paid back taxes, for example, the title doesn't come in and step into that. As part of the closing process, the title company ensures that those taxes are paid or deferred, however, credit is given to the buyer. The bottom line is those taxes are going to be handled at closing such that exceptions will come into play. Before we got on the line, I had a bit of a thought about this.It's like, “The property is being conveyed clear of debts and liens for the new borrower.” The title company at closing will ensure and assure the lender and the new purchaser that the property that they're receiving is going to be free and clear of debt and lien and not to exclude taxes, HOA, any other underlining lien holders that might be on the title, or that might have any derogatory authority to foreclose that would affect the new owner. We make sure that all debts and liens are paid in full so the new borrower who's getting the property is receiving it with only their new lienholder or obviously as a free and clear investment to pay in cash. We do ensure that all debts are paid in full upon conveyance. Conveyance is transfer title.Conveyance means a transfer of title from one party to another or one person to another or entity. Another example is conveyance or the right of possession if the house is sold, and let's say there's a tenant or a renter in it. That new owner has to honor the lease that the tenant is under until the completion of that. However, if there's a problem with that title that is like, “It has nothing to do with the title of the property. That's the property.” That is an exception to anything as well.Tenants, anything with the physicality of the property in reference to being a landlord type of situation. Our insurance is only to protect the title, the actual debt in the lien, the conveyance of a predecessor-to-predecessor, owner to owner throughout the years, to make sure that every owner conveyed that property without any debt or lien or clouds in the title. A conveyance is a very clean and clear pass-through of the owner to owner throughout the years. We're here to ensure that no one from many years ago was going to come and have some right to your property that you purchased here many years later.We make sure that all of that is a clear conveyance of title throughout the years for you, the end buyer and owner, to have a good title. In reference to somebody living in the shack behind the house, we have nothing to do with it. That's something that's negotiated in the contract process. We are here to show the history, the debt and the ownership conveyance. The ownership lineage of title now in reference to who lives there and how or damage that’s contract stuff.You don't care about the use of the property. It's just the conveyance of the title.Also, the deb. That there's nothing there that's going to come back and the paperwork.Wells Fargo is not going to come back and say, “We're going to foreclose now. I don't care if you just bought it.” That's not going to happen.[caption id="attachment_3199" align="aligncenter" width="600"] Title Insurance: The person who signed the contract is the owner of the property. Someone who isn't the owner can't sell it, so look at schedule A to know who the owner is.[/caption] We made sure Wells Fargo got paid off in full. That's what we do. Some exclusions are he's talking about this vision, which would have been landlord stuff, but it would be some of the city stuff. Some of your exclusions to title would be city easements, some right of ways that the property might be backed up to a utility right away. Those are some of the things that are excluded in the title because of the fact that the utility districts and the counties have the right to do what they need to do for the community.If your property happens to fall in an easement, then that would be excluded from your title. We cannot ensure that the city won't come in on your property and dig up an easement or something to put new pipes or new fiber optics that might affect your property. That would be considered an exclusion. Those are usually on Schedule B. I’m discussing Schedules, A, B, C, and D.Let’s run through the schedules of a title policy.As we left off, you open the title, then we get the title back. The title commitment is ready from Patriot Title, and we send you out your title commitment. Your title commitment is ready. Here's a copy of the tax certificates, the preliminary taxes of what we've found. These are all our findings. This is what we do. This is our due diligence. The commitment I consider was like your Bible of what we do in due diligence. It's going to have everything on that commitment and the tax certs. This is what we're based on in our due diligence. This is all our research available now.Schedule A is going to show you basically who is purchasing it. That would probably be yourself or your client, who the lender is, who's lending the money. If they ask us to put it on that front Schedule A and what their loan is going to be for based on the contract that you provided us. At the very bottom, it's going to disclose who the vested owners are. Why that's so important is that it has to be the same person who signed the contract. Why?Because someone who signs a contract has to be an owner of the property, let’s say Gerald Jr. signed it, but it's Gerald Sr. who's the owner of the title. Gerald Jr. is not the owner. Gerald Sr. is, so Gerald Jr. should not be selling this property or doesn't have rights to sell that property as it states in the title at this point. There could be some variables that may be Gerald Sr. died and now he's an heir. We're going to a whole different spectrum of things.It's important that you look at Schedule A because it tells you who is the seller and if that person who sold it is the same person that signed your contract and/or is there someone else that's on the ownership as well as the person that's under contract?...

PLP – 139 Know The History Of Your Property With Title Insurance With Rachel Luna

Max Keller

LEAD

Writing a book can help you attract private money lenders and motivated sellers so you could win the marketing game in real estate. Today’s guest, Max Keller, proves that. Max Keller is a real estate investor, best-selling author, and business coach. In this episode, he joins Keith Baker to discuss utilizing books as a lead generation technique and how to get prospective sellers to trust you so you could stand out among competitors. He also shares the two ways to get deals through hunting and trapping. He explains how he gets deals through the use of different methods giving them a network of people. Tune into this episode so you could have the opportunity to build great relationships and make your business grow too!---Listen to the podcast here:Utilizing Real Estate Books For Lead Generation And Beating Competition With Max KellerMax Keller Utilizes Books To Get Sellers To Know, Like And Trust HimI want to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place but if you want to learn from my mistakes so that you can one, avoid them and two, profit from them, pull up a chair and pour yourself a drink because this show is for you. This show is dedicated to giving people like you and me the knowledge and the confidence for successful and profitable private lending, the most passive form of real estate investment known to man.[caption id="attachment_3186" align="alignleft" width="200"] Home To Home: The Step By Step Senior Housing Guide[/caption]In this episode, I sit down and talk with Max Keller, who’s up in the North Texas area, the Dallas-Fort Worth Metroplex. Max is using a very unusual strategy for finding his deals and that is to use books to get his sellers to know, like and trust him. Before we dive into the heart of this episode, I got to do a little housekeeping and need to ask you, have you joined the show’s Facebook group? Why the hell not? Simply go to Facebook Groups and search for Private Lender Podcast.Answer a few quick questions so that I know you’re serious and can follow instructions and you will be let in. You’ll get to hobnob and mingle with private lenders from all over this great country of ours. We may be divided but it’s still a great country. If you want to get your private lending off the ground for possibly some opportunities to bounce a few ideas off of me or perhaps we could even go down the coaching road if you like, please go to PrivateLenderAcademy.com and click on Apply Now. It's time to get down to the brass tacks of this episode.Max Keller was recommended to me by someone I held dear in the podcast industry. Julie Houston, thank you. She has helped me out in ways, mindset, technical, process, things that I wouldn’t think of. She hasn’t charged me a dime for it. All of her advice has been for free, maybe a lunch or two here or there. Considering the value that I’ve received from Julie, I’m in the deficits. Julie, thank you. A big shout out to you. Thank you for introducing me to Max.This has been a game changer in many ways for me. Thinking about this helps expand the mindset into what’s out there. I’m babbling already. It’s best to get to the interview, let Max discuss and describe how he uses books and how he’s helping his students to get some solid leads, generating some nice leads for some nice property acquisition. Let’s go ahead and jump into the interview with Max Keller.--Lender Nation, I am pleased to have Max Keller on the show, who was formerly a teacher and now is a full-time real estate investor but more importantly, he can teach you how to write a book. Max, welcome to the show.It’s good to be here. Let’s go.You come highly recommended from a friend of mine. That gets to the door but the fact that you were a teacher, that's something I've always wanted to do. Hence with the Private Lender Academy, I'm finally coming to get to that point. My path is a little bit reversed from yours. Tell me what brought you to this moment here on the show. How'd you get to the world of real estate and books?[bctt tweet=" If you don't know what’s working, you can't duplicate it. " via="no"]I hear that phrase, “Overnight success, lifetime in the making.” That's the way it feels. Everything that I did build on itself. Before I was in real estate full-time, I was an Algebra teacher at a Title 1 school. I coached football, basketball and track. I taught algebra and I loved it. The only thing is I wanted to make more income. My goal was to take a more passive approach and get maybe 1 or 2 rentals a year. If I stayed on that pattern, then at the end of finishing up teaching and retiring, I'd have a nice little nest egg. Going in real estate, I started realizing that it's a great way to increase your active income and start doing more deals.I left my job years ago. The day after Memorial Day, I told my principal, “I wasn't coming back.” It was a tough decision but it's been great. I've flipped about 130 houses lately because of where the prices have been. We'd done mostly wholesaling but deals in Texas still cashflow, especially mobile homes and things like that. I've been doing investing. On the borrowing side, I did the normal progression. My first deal was a self-funded whole tale. I took it down with a line of credit. The houses were a lot cheaper than in 2015. I cleaned it up a little. I sold it. I made $15,000 and that was cool. I wanted to do it again.The next deal, I took it down with that same line of credit but then once I had another deal, I couldn't keep doing that. My credit was good. That helped. It's funny. My credit was so good because I never used it. It's like, “What a weird system?” It was fine. I went to a community credit bank like credit union kind of thing, local bank and that worked good. I did a couple of deals like that. I was running out and they wanted me to jump through a lot of hoops. I went hard money. I did hard money for my flip deals for a while. I got involved and started meeting some local private money lenders. I love working with them. It was fun. I got to show them my deals. Some of them had a lot of experience. Some of them didn't have very much at all.Being a teacher, which has the teacher mindset, I'd say, “Come and check out. Let's not rush. Come and see one of my properties over here in Hearst. I'm doing this one. Check it out. I've got one over here in Irving.” I explained to him how it worked. It was hard because I'm a people pleaser. I liked my hard money lender. It was expensive. It wasn't as much flexibility and I wanted to have more long-term stuff too. I knew private lenders were looking to find good people, good deals and make good rates of return.I started using books and things like that. That was a total unknown but I started using books as an education piece to attract more private money lenders and motivated sellers. The overall model of how I got here is I taught before I got in here and I still do. That's the best way to build relationships, help people and make the business grow. I'm glad that I still get to do that. It's fun.I'm glad to know that, one, you taught algebra. God bless you. What grades? I'm curious.It was the eighth if they were ahead and then ninth on grade. I had one group of kids that were two years behind. They should have been juniors. It depends on how you are as a student. Let's say it like this. When you go to teach and you go to the job fair, there's elementary, middle school and high school. The elementary line, there are 400 people in it. All these people who've been waiting their whole lives to be kindergarten teachers.You go to high school line. Those are people with a lot of experience. They love their subjects. In middle school, junior high, there's nobody. If you have middle school kids of your own or cousins, you'll know but I liked it. What I liked about working with kids is the same thing I like with the people that I work within real estate. I like working with people that tell the truth. Kids, believe it or not, they almost always tell the truth. I remember one time I went to class. My hair spiked up. I thought I was looking cool and on trend. The kids shut that down in three seconds like, “Mr. Keller, we can see all the way through to your scalp.” That's the way kids are.Adults aren't always like that. From my own experience, it's important that I get to know the people I'm working with. On the other side, your readers, it's super important that they understand what's a good deal and what's not a good deal before they invest in it. Are they getting in with the right person? There's a lot of sleek talking people. Adults aren't always truthful. We got to find who's telling the truth. Who's doing what they say they're doing before we invest in the deals. That's a piece of teaching that I bring we’ll never forget.To your point, I would say real estate investors are very persuasive and passionate people. I tell students do not fall in love with the investor's passion or enthusiasm for the project and be the one to tell them, no. Have your brands. This is where you lend. Don't be afraid to say no. I bought Tim Grover's new book. He coached Kobe and Jordan. I heard him on a podcast. There was a guy who was trying out for the NBA and Tim Grover told him, “You're not NBA material. You can play for a long time. You can make a lot of money but the NBA is not your game.” The guy was upset, offended by Tim's honesty.[caption id="attachment_3187" align="aligncenter" width="600"] Lead Generation Through Books: The traditional marketing methods are going to be obsolete because of Wall Street. They have a big appetite for single-family homes. They have a lot of data, technology, and resources. With that, they can pay more than most people are willing to pay.[/caption] Years later, he sees him at an all-star game. The guy's not playing in the NBA. He goes, “You're the only one who told me the truth.” Everyone else bolstered him up, “You can do it.” Tim was like, “You're not there.” I don't remember if it was a talent or a mindset thing but he could see. He’s like, “You're a great athlete but NBA is not for you. Go to Europe, you'll kill it.” He wasted his time. That honesty of youth with the children telling exactly how it is, I believe into following that. I have to ask this because we're coming out of the COVID situation. This is the middle of 2021. You spoke that you're wholesaling. You're up in the Dallas-Fort Worth area. How crazy is the market up there? Bidding wars, above ask, what are the metrics that are going on?For most people, that's the way it is. For us and for the deals that we do, it's not like that but it's because the way that we market is totally different. We started marketing very different back in 2017. For most people, it's tough. I got a call from a lady, Diana. It's another exclusive deal. We're getting a lot of exclusive deals but it's because the way that we're reaching out to people is so different. We're leading with value and education. Not that other people don't have that too. Most folks are marketing for deals.In my opinion, it’s totally wrong. The way that they're marketing for deals within a few more years is going to be totally obsolete. The traditional marketing methods are going to be obsolete. The reason is because Wall Street, big hedge funds, have a big appetite for single-family homes and in our neck of the woods. They're still cashflowing. They have a lot of data, technology, resources and can pay more than most people are willing to pay.It was by accident and it worked out good. A little context, back in 2017, I was on track to do about 30 deals for the year but I felt like every house I was going into is like what you're saying. I was interviewing for the deals and taking number. I remember going to this one house in Grand Prairie. There were literally twenty investors in the house. When you're doing deals like that, I call them a win lose.The homeowner wins because they get a price that they wouldn't have gotten 2 or 3 years ago but you lose because you're taking on the same amount of risk but you're not covering that risk. If you have a private lender on that deal and you're doing these skinny deals, their money has more risk. It's a real situation that's going on. How we've circumvented, it is two ways. One, I found a niche that I like to work with. I made a list of all the deals that I had done. I was up to about Deal Number 50 in 2017. I made a list of the deals. I put the criteria of the people I wanted to work with. For me, it was pretty simple. I want to make a good profit on a deal because it takes me about the same amount of time to flip a house and make 40 than it does to make 20. I was like, “I need to stick with the better deals.”[bctt tweet="Lead with value and education so people can trust you." via="no"]The other one is, I didn't want to work with people when I make an offer. They couldn’t resist. It was like a tug of war like, “No, my house isn't worth that much. What are you talking about?” I’m like, “I'm the expert. I do this all day.” This is what I'm talking about. I want to work with people who saw me more as their consultant and trusted advisor. I want to have fun. I didn't want to work with people that I had to go bail out of jail and they were yelling at me on the phone. All the things that went with my traditional motivated seller marketing.What happened for me were two things. One is when I looked through my deals, most of them didn't meet all three criteria but the ones that did were all seniors. I was like, “Seniors?” I started to peel back. I was like, “I want to work with more senior homeowners. What marketing is helping find those folks?” I found out that my traditional marketing wasn't where they were coming from. I was getting people by accident. They see us in the neighborhood. Their family members would call us.They would close a lot higher rate. I found they were like slow to trust. When they did trust you, they were very loyal. They wouldn't go behind your back for $100 or Redfin's going to give $2,000 more dollars. I was getting these deals and making an offer. Somebody else was $10,000 more and they were still taking my offer. I didn't know why. There are times in our business where things are working but we don't know why they're working. You don't know why you can't duplicate it.I was like, “I need to know why. I don't want to lock into stuff.” I called up one of the sellers and I asked him, “Remember me, Max Savior Home Buyers?” That's our home buying business. He's like, “Yeah.” I said, “You had a higher offer. Why don't you take that?” He said, “The reason is because we trusted you. You seem like you genuinely cared about our family and making the right decision. You were telling us about stuff that didn't even relate to you but it was good for us. Ultimately, that was more important than just the money.”That was the big a-ha moment number one. I started learning more about senior housing. My big a-ha number two, how we market is totally different and what makes it a lot easier to keep doing business in DFW. I was at an appointment with the adult child of a senior home owner. We bought their house. They said, “You've helped our family out a ton. You should write a book about this stuff.” I was like, “No. I'm a math teacher. I'm not an English teacher.” It's a big difference. Let's face it.I thought about it and I was like, “It's a good idea.” At the time, I was known in my area, my suburbs that I bought houses in as the guy who knew a lot about senior housing but I could be the guy who wrote the book on senior housing. I had a real unscientific approach. If anybody on here who’s trying to write content, do an eBook, write a book or write a blog, I've got a gift that I'm going to give you at the end that can help you do that and save a lot of time but I didn't have that at the time.I wrote down all the questions that the seniors were asking me, all the questions they should ask me, pros and cons of all the different options. I took care of my grandma growing up. If you look at my pictures of my birthday and stuff, it's my grandma, all of her friends and my friends too. I've always been around seniors. I liked working with them. I like kids and seniors. You got to have a lot of patients to be around both. I like kids because they tell the truth and they're hilarious. I love seniors because they're so wise. It's amazing, the greatest people.I wanted to do that more in my business. When I finished this book, it was done. I thought it was pretty good. I started giving it out to my prospects and friends. I printed out 100 copies. Every time somebody call our office, instead of saying, “We're going to come over to the house.” I say, “Have you gotten a copy of our book?” They're like, “Your book?” The other people buying houses don't have books.I said, “Yeah, I'll send you a copy of it. Chapter Three is all the ways to sell your house, pros and cons of each. It's a big decision. I don't want you to make a big mistake. Can you read Chapter Three before I come over?” They're like, “Yeah.” It did a couple of things. One is when we went over there, they read Chapter Three, but they read the other chapters too. They got to know us. They felt like we were credible and trusted because we put the time into it to write a book.What else was cool is most of the time, there was nobody else. Why would they call other people when they already have the person that wrote the book on the subject? That's how we get deals. We use a lot of different methods. We have a network of people all over, investors, agents and brokers that license our content. I'm buying right here in DFW. I'm not buying in Florida or Houston. We have people who use the books.We did the same thing on the private lending side. There's an education piece behind that. You're doing an amazing job coaching people up on that. We give people our book. It's been cool. I call it share and attract. We share what we're doing with people. We attract the people to us that want to work with us. It’s like hunting and trapping. Some people love hunting people down. They love the thrill or the chase. I never liked that. I never liked hard closing techniques. It felt unnatural. Trapping is where you set out the date. This is what the opportunity looks like. If they come to...

Writing a book can help you attract private money lenders and motivated sellers so you could win the marketing game in real estate. Today’s guest, <a href="https://dealschasingyou.com/rei-book-writing-checklist/?ref=podcast&amp;affiliate=" rel="nofollow" target="_blank">Max Keller</a>, proves that. Max Keller is a real estate investor, best-selling author, and business coach. In this episode, he joins Keith Baker to discuss utilizing books as a lead generation technique and how to get prospective sellers to trust you so you could stand out among competitors. He also shares the two ways to get deals through hunting and trapping. He explains how he gets deals through the use of different methods giving them a network of people. Tune into this episode so you could have the opportunity to build great relationships and make your business grow too!---<h3>Listen to the podcast here:</h3><h2>Utilizing Real Estate Books For Lead Generation And Beating Competition With Max Keller</h2><h3>Max Keller Utilizes Books To Get Sellers To Know, Like And Trust Him</h3>I want to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place but if you want to learn from my mistakes so that you can one, avoid them and two, profit from them, pull up a chair and pour yourself a drink because this show is for you. This show is dedicated to giving people like you and me the knowledge and the confidence for successful and profitable private lending, the most passive form of real estate investment known to man.[caption id="attachment_3186" align="alignleft" width="200"] Home To Home: The Step By Step Senior Housing Guide[/caption]In this episode, I sit down and talk with <a href="https://www.linkedin.com/in/max-keller-567760154/" rel="nofollow" target="_blank">Max Keller</a>, who’s up in the North Texas area, the Dallas-Fort Worth Metroplex. Max is using a very unusual strategy for finding his deals and that is to use books to get his sellers to know, like and trust him. Before we dive into the heart of this episode, I got to do a little housekeeping and need to ask you, have you joined the show’s Facebook group? Why the hell not? Simply go to Facebook Groups and search for <a href="https://www.facebook.com/groups/674936429994760/" rel="nofollow" target="_blank">Private Lender Podcast</a>.Answer a few quick questions so that I know you’re serious and can follow instructions and you will be let in. You’ll get to hobnob and mingle with private lenders from all over this great country of ours. We may be divided but it’s still a great country. If you want to get your private lending off the ground for possibly some opportunities to bounce a few ideas off of me or perhaps we could even go down the coaching road if you like, please go to <a href="http://www.PrivateLenderAcademy.com" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a> and click on Apply Now. It's time to get down to the brass tacks of this episode.Max Keller was recommended to me by someone I held dear in the podcast industry. Julie Houston, thank you. She has helped me out in ways, mindset, technical, process, things that I wouldn’t think of. She hasn’t charged me a dime for it. All of her advice has been for free, maybe a lunch or two here or there. Considering the value that I’ve received from Julie, I’m in the deficits. Julie, thank you. A big shout out to you. Thank you for introducing me to Max.This has been a game changer in many ways for me. Thinking about this helps expand the mindset into what’s out there. I’m babbling already. It’s best to get to the interview, let Max discuss and describe how he uses books and how he’s helping his students to get some solid leads, generating some nice leads for some nice property acquisition. Let’s go ahead and jump into the interview with Max Keller.--Lender Nation, I am pleased to have <a href="https://www.linkedin.com/in/max-keller-567760154/" rel="nofollow" target="_blank">Max Keller</a> on the show, who was formerly a teacher and now is a full-time real estate investor but more importantly, he can teach you how to write a book. Max, welcome to the show.It’s good to be here. Let’s go.You come highly recommended from a friend of mine. That gets to the door but the fact that you were a teacher, that's something I've always wanted to do. Hence with the Private Lender Academy, I'm finally coming to get to that point. My path is a little bit reversed from yours. Tell me what brought you to this moment here on the show. How'd you get to the world of real estate and books?[bctt tweet=" If you don't know what’s working, you can't duplicate it. " via="no"]I hear that phrase, “Overnight success, lifetime in the making.” That's the way it feels. Everything that I did build on itself. Before I was in real estate full-time, I was an Algebra teacher at a Title 1 school. I coached football, basketball and track. I taught algebra and I loved it. The only thing is I wanted to make more income. My goal was to take a more passive approach and get maybe 1 or 2 rentals a year. If I stayed on that pattern, then at the end of finishing up teaching and retiring, I'd have a nice little nest egg. Going in real estate, I started realizing that it's a great way to increase your active income and start doing more deals.I left my job years ago. The day after Memorial Day, I told my principal, “I wasn't coming back.” It was a tough decision but it's been great. I've flipped about 130 houses lately because of where the prices have been. We'd done mostly wholesaling but deals in Texas still cashflow, especially mobile homes and things like that. I've been doing investing. On the borrowing side, I did the normal progression. My first deal was a self-funded whole tale. I took it down with a line of credit. The houses were a lot cheaper than in 2015. I cleaned it up a little. I sold it. I made $15,000 and that was cool. I wanted to do it again.The next deal, I took it down with that same line of credit but then once I had another deal, I couldn't keep doing that. My credit was good. That helped. It's funny. My credit was so good because I never used it. It's like, “What a weird system?” It was fine. I went to a community credit bank like credit union kind of thing, local bank and that worked good. I did a couple of deals like that. I was running out and they wanted me to jump through a lot of hoops. I went hard money. I did hard money for my flip deals for a while. I got involved and started meeting some local private money lenders. I love working with them. It was fun. I got to show them my deals. Some of them had a lot of experience. Some of them didn't have very much at all.Being a teacher, which has the teacher mindset, I'd say, “Come and check out. Let's not rush. Come and see one of my properties over here in Hearst. I'm doing this one. Check it out. I've got one over here in Irving.” I explained to him how it worked. It was hard because I'm a people pleaser. I liked my hard money lender. It was expensive. It wasn't as much flexibility and I wanted to have more long-term stuff too. I knew private lenders were looking to find good people, good deals and make good rates of return.I started using books and things like that. That was a total unknown but I started using books as an education piece to attract more private money lenders and motivated sellers. The overall model of how I got here is I taught before I got in here and I still do. That's the best way to build relationships, help people and make the business grow. I'm glad that I still get to do that. It's fun.I'm glad to know that, one, you taught algebra. God bless you. What grades? I'm curious.It was the eighth if they were ahead and then ninth on grade. I had one group of kids that were two years behind. They should have been juniors. It depends on how you are as a student. Let's say it like this. When you go to teach and you go to the job fair, there's elementary, middle school and high school. The elementary line, there are 400 people in it. All these people who've been waiting their whole lives to be kindergarten teachers.You go to high school line. Those are people with a lot of experience. They love their subjects. In middle school, junior high, there's nobody. If you have middle school kids of your own or cousins, you'll know but I liked it. What I liked about working with kids is the same thing I like with the people that I work within real estate. I like working with people that tell the truth. Kids, believe it or not, they almost always tell the truth. I remember one time I went to class. My hair spiked up. I thought I was looking cool and on trend. The kids shut that down in three seconds like, “Mr. Keller, we can see all the way through to your scalp.” That's the way kids are.Adults aren't always like that. From my own experience, it's important that I get to know the people I'm working with. On the other side, your readers, it's super important that they understand what's a good deal and what's not a good deal before they invest in it. Are they getting in with the right person? There's a lot of sleek talking people. Adults aren't always truthful. We got to find who's telling the truth. Who's doing what they say they're doing before we invest in the deals. That's a piece of teaching that I bring we’ll never forget.To your point, I would say real estate investors are very persuasive and passionate people. I tell students do not fall in love with the investor's passion or enthusiasm for the project and be the one to tell them, no. Have your brands. This is where you lend. Don't be afraid to say no. I bought <a href="https://timgrover.com/" rel="nofollow" target="_blank">Tim Grover</a>'s new book. He coached Kobe and Jordan. I heard him on a podcast. There was a guy who was trying out for the NBA and Tim Grover told him, “You're not NBA material. You can play for a long time. You can make a lot of money but the NBA is not your game.” The guy was upset, offended by Tim's honesty.[caption id="attachment_3187" align="aligncenter" width="600"] Lead Generation Through Books: The traditional marketing methods are going to be obsolete because of Wall Street. They have a big appetite for single-family homes. They have a lot of data, technology, and resources. With that, they can pay more than most people are willing to pay.[/caption] Years later, he sees him at an all-star game. The guy's not playing in the NBA. He goes, “You're the only one who told me the truth.” Everyone else bolstered him up, “You can do it.” Tim was like, “You're not there.” I don't remember if it was a talent or a mindset thing but he could see. He’s like, “You're a great athlete but NBA is not for you. Go to Europe, you'll kill it.” He wasted his time. That honesty of youth with the children telling exactly how it is, I believe into following that. I have to ask this because we're coming out of the COVID situation. This is the middle of 2021. You spoke that you're wholesaling. You're up in the Dallas-Fort Worth area. How crazy is the market up there? Bidding wars, above ask, what are the metrics that are going on?For most people, that's the way it is. For us and for the deals that we do, it's not like that but it's because the way that we market is totally different. We started marketing very different back in 2017. For most people, it's tough. I got a call from a lady, Diana. It's another exclusive deal. We're getting a lot of exclusive deals but it's because the way that we're reaching out to people is so different. We're leading with value and education. Not that other people don't have that too. Most folks are marketing for deals.In my opinion, it’s totally wrong. The way that they're marketing for deals within a few more years is going to be totally obsolete. The traditional marketing methods are going to be obsolete. The reason is because Wall Street, big hedge funds, have a big appetite for single-family homes and in our neck of the woods. They're still cashflowing. They have a lot of data, technology, resources and can pay more than most people are willing to pay.It was by accident and it worked out good. A little context, back in 2017, I was on track to do about 30 deals for the year but I felt like every house I was going into is like what you're saying. I was interviewing for the deals and taking number. I remember going to this one house in Grand Prairie. There were literally twenty investors in the house. When you're doing deals like that, I call them a win lose.The homeowner wins because they get a price that they wouldn't have gotten 2 or 3 years ago but you lose because you're taking on the same amount of risk but you're not covering that risk. If you have a private lender on that deal and you're doing these skinny deals, their money has more risk. It's a real situation that's going on. How we've circumvented, it is two ways. One, I found a niche that I like to work with. I made a list of all the deals that I had done. I was up to about Deal Number 50 in 2017. I made a list of the deals. I put the criteria of the people I wanted to work with. For me, it was pretty simple. I want to make a good profit on a deal because it takes me about the same amount of time to flip a house and make 40 than it does to make 20. I was like, “I need to stick with the better deals.”[bctt tweet="Lead with value and education so people can trust you." via="no"]The other one is, I didn't want to work with people when I make an offer. They couldn’t resist. It was like a tug of war like, “No, my house isn't worth that much. What are you talking about?” I’m like, “I'm the expert. I do this all day.” This is what I'm talking about. I want to work with people who saw me more as their consultant and trusted advisor. I want to have fun. I didn't want to work with people that I had to go bail out of jail and they were yelling at me on the phone. All the things that went with my traditional motivated seller marketing.What happened for me were two things. One is when I looked through my deals, most of them didn't meet all three criteria but the ones that did were all seniors. I was like, “Seniors?” I started to peel back. I was like, “I want to work with more senior homeowners. What marketing is helping find those folks?” I found out that my traditional marketing wasn't where they were coming from. I was getting people by accident. They see us in the neighborhood. Their family members would call us.They would close a lot higher rate. I found they were like slow to trust. When they did trust you, they were very loyal. They wouldn't go behind your back for $100 or Redfin's going to give $2,000 more dollars. I was getting these deals and making an offer. Somebody else was $10,000 more and they were still taking my offer. I didn't know why. There are times in our business where things are working but we don't know why they're working. You don't know why you can't duplicate it.I was like, “I need to know why. I don't want to lock into stuff.” I called up one of the sellers and I asked him, “Remember me, Max Savior Home Buyers?” That's our home buying business. He's like, “Yeah.” I said, “You had a higher offer. Why don't you take that?” He said, “The reason is because we trusted you. You seem like you genuinely cared about our family and making the right decision. You were telling us about stuff that didn't even relate to you but it was good for us. Ultimately, that was more important than just the money.”That was the big a-ha moment number one. I started learning more about senior housing. My big a-ha number two, how we market is totally different and what makes it a lot easier to keep doing business in DFW. I was at an appointment with the adult child of a senior home owner. We bought their house. They said, “You've helped our family out a ton. You should write a book about this stuff.” I was like, “No. I'm a math teacher. I'm not an English teacher.” It's a big difference. Let's face it.I thought about it and I was like, “It's a good idea.” At the time, I was known in my area, my suburbs that I bought houses in as the guy who knew a lot about senior housing but I could be the guy who wrote the book on senior housing. I had a real unscientific approach. If anybody on here who’s trying to write content, do an eBook, write a book or write a blog, I've got a gift that I'm going to give you at the end that can help you do that and save a lot of time but I didn't have that at the time.I wrote down all the questions that the seniors were asking me, all the questions they should ask me, pros and cons of all the different options. I took care of my grandma growing up. If you look at my pictures of my birthday and stuff, it's my grandma, all of her friends and my friends too. I've always been around seniors. I liked working with them. I like kids and seniors. You got to have a lot of patients to be around both. I like kids because they tell the truth and they're hilarious. I love seniors because they're so wise. It's amazing, the greatest people.I wanted to do that more in my business. When I finished this book, it was done. I thought it was pretty good. I started giving it out to my prospects and friends. I printed out 100 copies. Every time somebody call our office, instead of saying, “We're going to come over to the house.” I say, “Have you gotten a copy of our book?” They're like, “Your book?” The other people buying houses don't have books.I said, “Yeah, I'll send you a copy of it. Chapter Three is all the ways to sell your house, pros and cons of each. It's a big decision. I don't want you to make a big mistake. Can you read Chapter Three before I come over?” They're like, “Yeah.” It did a couple of things. One is when we went over there, they read Chapter Three, but they read the other chapters too. They got to know us. They felt like we were credible and trusted because we put the time into it to write a book.What else was cool is most of the time, there was nobody else. Why would they call other people when they already have the person that wrote the book on the subject? That's how we get deals. We use a lot of different methods. We have a network of people all over, investors, agents and brokers that license our content. I'm buying right here in DFW. I'm not buying in Florida or Houston. We have people who use the books.We did the same thing on the private lending side. There's an education piece behind that. You're doing an amazing job coaching people up on that. We give people our book. It's been cool. I call it share and attract. We share what we're doing with people. We attract the people to us that want to work with us. It’s like hunting and trapping. Some people love hunting people down. They love the thrill or the chase. I never liked that. I never liked hard closing techniques. It felt unnatural. Trapping is where you set out the date. This is what the opportunity looks like. If they come to...

PLP – 138 Utilizing Real Estate Books For Lead Generation And Beating Competition With Max Keller

Is This The New Normal?Hello Private Lender nation and welcome to episode 137 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today.Love the show? Subscribe, rate, review, and share!Here’s How »If you’re looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place.But do you want to learn from my mistakes so you can both avoid and profit from them? Well then pull up a chair and pour yourself a drink, my friend. Because this podcast is just for you, as I am dedicated to giving people just like you and me the knowledge and confidence for successful and profitable Private Lending.In today’s episode, I will bore you and discuss some very recent conversations I had while on a trip to San Francisco and the Bay Area, and I heard some interesting insights from some friends of the show. But before we get to the heart of the matter, first I need to do a little housekeeping.1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast.Private Lender Podcast Facebook Group2 – And, please head over to PrivateLenderAcademy.com and click on Apply Now to learn more about how to get your Private Lending off ground and for opportunities to receive coaching from me.Apply – Private Lender AcademyOK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: Are we normal?I took a short trip and flew to San Francisco earlier in August and spent a few days catching up with some friends of the show as well as a few dear old friends who call the Bay Area home.And I caught an A’s game against the Rangers, so I’ve now ticked 3 Major League Ball parks off my bucket list.I’m glad I was able to take the trip before the government tries to lock us down again, which brings me to the question I have for you, dear listener:Are we in the new normal, or are we simply in a bubble in the housing market cycle?I won’t name any names yet as I haven’t’ asked whether I could mention names (you know, in case they are wrong) and I had the idea for today’s topic and wanted to get this episode recorded and distributed so here we go:One position I heard, especially in the case of the Austin, Texas market, is that we are in the new normal. Austin will mimic housing in the Bay Area historically speaking, which means high prices are here to stay (at least in the Austin area) and they will only continue to rise.Then, I heard the belief that we are long in the tooth for this market and a correction is coming – a very popular opinion that many investors share. Especially those investors who lived through 2008 and the mortgage crisis.In the case of the Houston area, I did a little reading and have found the following: Average house price up 14%1 month of inventory (6 months is considered a stable market)500,000 people move to TX every yearConstruction material shortage, lumber up 250%Days on Market are almost non-existentSo, which side are you on?Are we in the new normal with prices continuing to increase?Or is there a correction looming?Connect with me on social media and let me know:Private Lender Podcast FacebookKeith Baker on LinkedInOr email me: keith@privatelenderpodcast.com.OK. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice.It doesn’t take that long and it’s a small price for the value I try to provide.That’s gonna do it for Episode 137 and just a few final thoughts:1 – Join the Private Lender Podcast Facebook Group2 – Remember to head over to http://privatelenderacademy.com/ for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now”So, as I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending.I’ll catch you on the next episode.-kLove the show? Subscribe, rate, review, and share!Here’s How »Join the Private Lender Podcast community today:PrivateLenderPodcast.comPrivate Lender Podcast FacebookKeith Baker on LinkedInPrivate Lender Podcast TwitterPrivate Lender Podcast YouTube

Is This The New Normal?Hello Private Lender nation and welcome to episode 137 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today.Love the show? Subscribe, rate, review, and share!<ul><li><a href="http://privatelenderpodcast.com/blog/how-to-subscribe-rate-our-podcast-5-stars-on-itunes/" rel="nofollow" target="_blank">Here’s How »</a></li></ul>If you’re looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place.But do you want to learn from my mistakes so you can both avoid and profit from them? Well then pull up a chair and pour yourself a drink, my friend. Because this podcast is just for you, as I am dedicated to giving people just like you and me the knowledge and confidence for successful and profitable Private Lending.In today’s episode, I will bore you and discuss some very recent conversations I had while on a trip to San Francisco and the Bay Area, and I heard some interesting insights from some friends of the show. But before we get to the heart of the matter, first I need to do a little housekeeping.1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast.<a href="https://www.facebook.com/groups/674936429994760" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a>2 – And, please head over to <a href="http://PrivateLenderAcademy.com" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a> and click on Apply Now to learn more about how to get your Private Lending off ground and for opportunities to receive coaching from me.<a href="http://privatelenderacademy.com/apply/" rel="nofollow" target="_blank">Apply – Private Lender Academy</a>OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: Are we normal?I took a short trip and flew to San Francisco earlier in August and spent a few days catching up with some friends of the show as well as a few dear old friends who call the Bay Area home.And I caught an A’s game against the Rangers, so I’ve now ticked 3 Major League Ball parks off my bucket list.I’m glad I was able to take the trip before the government tries to lock us down again, which brings me to the question I have for you, dear listener:Are we in the new normal, or are we simply in a bubble in the housing market cycle?I won’t name any names yet as I haven’t’ asked whether I could mention names (you know, in case they are wrong) and I had the idea for today’s topic and wanted to get this episode recorded and distributed so here we go:One position I heard, especially in the case of the Austin, Texas market, is that we are in the new normal. Austin will mimic housing in the Bay Area historically speaking, which means high prices are here to stay (at least in the Austin area) and they will only continue to rise.Then, I heard the belief that we are long in the tooth for this market and a correction is coming – a very popular opinion that many investors share. Especially those investors who lived through 2008 and the mortgage crisis.In the case of the Houston area, I did a little reading and have found the following:<ul><li> Average house price up 14%</li><li>1 month of inventory (6 months is considered a stable market)</li><li>500,000 people move to TX every year</li><li>Construction material shortage, lumber up 250%</li><li>Days on Market are almost non-existent</li></ul>So, which side are you on?Are we in the new normal with prices continuing to increase?Or is there a correction looming?Connect with me on social media and let me know:<ul><li><a href="https://www.facebook.com/PrivateLenderPodcast/" rel="nofollow" target="_blank">Private Lender Podcast Facebook</a></li><li><a href="https://www.linkedin.com/in/keith-baker-344944155/" rel="nofollow" target="_blank">Keith Baker on LinkedIn</a></li></ul>Or email me: keith@privatelenderpodcast.com.OK. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice.It doesn’t take that long and it’s a small price for the value I try to provide.That’s gonna do it for Episode 137 and just a few final thoughts:1 – Join the <a href="https://www.facebook.com/groups/674936429994760" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a>2 – Remember to head over to <a href="http://privatelenderacademy.com/" rel="nofollow" target="_blank">http://privatelenderacademy.com/</a> for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now”So, as I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending.I’ll catch you on the next episode.-kLove the show? Subscribe, rate, review, and share!<ul><li><a href="http://privatelenderpodcast.com/blog/how-to-subscribe-rate-our-podcast-5-stars-on-itunes/" rel="nofollow" target="_blank">Here’s How »</a></li></ul>Join the Private Lender Podcast community today:<ul><li><a href="http://privatelenderpodcast.com/" rel="nofollow" target="_blank">PrivateLenderPodcast.com</a></li><li><a href="https://www.facebook.com/PrivateLenderPodcast/" rel="nofollow" target="_blank">Private Lender Podcast Facebook</a></li><li><a href="https://www.linkedin.com/in/keith-baker-344944155/" rel="nofollow" target="_blank">Keith Baker on LinkedIn</a></li><li><a href="https://twitter.com/PrivLendPodcast?lang=en" rel="nofollow" target="_blank">Private Lender Podcast Twitter</a></li><li><a href="https://www.youtube.com/channel/UCzctXatpCAOhF0XeV1fq2dQ?view_as=subscriber" rel="nofollow" target="_blank">Private Lender Podcast YouTube</a></li></ul>

PLP-137 Is This The New Normal?

George Salas

 Most people flip houses, become a landlord, or purchase properties to get the most returns in real estate. But for George Salas, he found an incredible opportunity in short-term rentals, where a lot of people don't even consider. He joins Keith Baker to delve into how rent arbitrage increased his ROI significantly. He shares how he acquires his financing and puts together ample funding to keep the ball rolling. George also explains how he deepens relationships with the people that he trains, eventually building joint ventures.---George Salas On Getting Long-Lasting Revenue Through Short-Term RentalsLearn How Rent Arbitrage Can Increase Your ROIIf you're a regular reader to this show, then you know that I do my best to keep the topics of the interviews either strictly private lending-related or at least interesting from a different investment or personal perspective. The topic of the episode is no different as guest George Salas is flip and crushing it in the short-term rental space.I met him at a Mastermind in Key West and I'm happy that we connected. I got on the plane to fly to Key West. I did not want to go. It had extremely limiting beliefs and yet is one of the best things I've done. I love to know stories of innovators and how people pivot when times change or when they get bad, and given the recent COVID scamdemic and the current bubble and the retail housing market.It's a real disease. All that stuff is over 99% survival rate. It's a flipping scamdemic. We are in a bubble. I'm calling it. Greenspan said, "You can't see a bubble until you're beyond it or it's burst." I'm calling it a bubble. More than $50,000 above ask in the market is a bubble. You can bookmark this show and can come back to it and give me grief or cheer me on when I'm proven right.I couldn't think of a better time to introduce you to my guest and his business model. The best thing of all is that George Salas is crushing the short-term rental game right here in Houston, in H-Town, which makes my smile a little bit bigger. Let's go ahead and get down to the brass tacks of the show and straight to the interview with George Salas.---George, welcome to the show.Thank you very much, Keith. It is an absolute honor to be here.I'm looking forward to you to explain your business model. That is, you don't flip, landlord, own or finance but you do short-term rentals. I'm going to give you the floor. Tell us how you got into real estate, short-term rentals and the basic mechanics of your business.My journey started when I was six years old. I'm sitting in the living room of my parents' house. My mom and dad pulled my brother and me aside and said, "Guys, we need to talk to you. You're going to go to your grandma's. You're going to stay there for a little bit." This is from a city by the name of Lima in Peru, the capital. We moved to a small town.It was just my mom. It was an environment where I get to stand by my dad. We left that city into a small little town and then the town was 20,000 people. I didn't get to see my father for nine years but he came back again into my life. We were moving here to the US. I came when I was fifteen. I wouldn't get to say bye to him twice and it affected me my entire life until I realized that I didn't need to be better for my dad.I didn't need to be in a place I’m good enough because I felt I wasn't good enough. I felt that because my father was never a great provider. We moved here. All through my young 15, 18 to 20, I was a grocery stacker. I worked at Kmart. Then I got into the nightlife and I invested in a nightclub. I was in the nightlife for ten years. I was the number one top promoter in Houston for 7 or 8 years.[bctt tweet="Bad decisions aren't as bad if you learn from them. Turn everything around and make something completely drastic." username=""]All of a sudden, I had the opportunity to invest in a club. I had a bunch of money saved up. I did invest in the venue and then I ended up losing everything. Here I am in the city. I had invested $400,000 into a club that I didn't have control over. I didn't have knowledge about real estate. I lost every penny of it. I'm sitting in the living room of my apartment at the time and I don't know what to do with my life. I'm literally lost. My buddy Ben Franklin called me. We go to his property in Flint. We spent 3 to 4 hours there and something clicks in my head with all of this inspiration.That was a life life-changing phone call. I started training, taking courses, going to seminars. I went to a seminar in January of 2019. Four months later, I got my first flip. I did start flipping. I want it to be this real estate guy. I wanted to do a lot of deals and build an impact on real estate without knowing that you needed to have a lot of money to invest in real estate if you want to buy, fix and flip.You need $50,000, $60,000. For DLS, you do what we do. At the time, we didn't have the resources or knowledge to do it. I made $46,000 on my first flip in 2018. Then six months later, I figured out what wholesaling was. By the end of that year, I had brought $98,000 of wholesale fees and used that cash. This is from the $5,000 in my pocket keys.I use that cash to put into my first twenty rental arbitrage, Airbnb that had cashflowed me $2,500. It's little apartments, studios and I started with those. Since then, until now I've been able to build a six-figure business a month. Our short-term rental business does $150,000 a month. I've done 50 real estate deals in two and a half years.I've got an amazing network of friends like yourself and in the know of all of the real estate community here in Houston. I'm in the best time of my life. I'm happy, fulfilled, fulfilling my destiny. It all started with that phone call and making those bad decisions. Sometimes bad decisions aren't as bad if you can learn from them. If you can turn everything around and just make something completely drastic. Look for that thing that you're wanting to find, which was a success in real estate and then I reached out to short-term rentals. That's pretty much a breakdown.It's compelling because I find it funny that I had to go to Key West and meet you, even though we're right here in Houston. I've seen you come up on Facebook back in the good old days when we went to REIA meetings in person. I'll even throw John Jackson in there in Dallas. I'll include him. It is a very good supportive network.The event, it's the same as I. It makes all the difference when you have people that you feel have your back or going to shoot you straight on something. To your point, if you mess up and you have a loss, it's either have a win or a lesson. That's the way it is. As long as you own the loss, then it's a lesson and you keep moving forward. You get into the typical way. You've wholesaled. By wholesaling, you know how to analyze a deal and see where the spread is and the margin, “What's the rehab going to cost this stuff?”As we were talking in the pre-show, you're buying single-family residences, condos or studios. The SFR, the single-family concept but you run them not like your normal rental. If you get $300 cashflow positive a month, you're doing well. You're bringing the apartment cashflow syndication model and that's what the short-term rentals do. When you acquire, how are you financing? Are you using a bank or private money? What mechanisms and cash are you using to acquire your property?When acquiring, we have a few strategies. I'm going to talk about purchase strategy and non-purchase. We use a method called rental arbitrage keys. This method breaks down like this. You go to a landlord, rent the property and ask them to allow you to sublease it on short-term rental platforms for 3, 4, 5, 6 to 30 days.That's one method and it doesn't require you buying the property. Utilizing this big real estate. I'm talking about 3,000, 4,000, 5,000 square foot homes without having a buyer. If they bring in anywhere between 5, 7, 8, 10, we've got several houses doing $15,000 up a month. I'm talking about that method. What we've purchased, which we also do, I would say 60% of our portfolio is rental arbitrage, 20% is purchased direct and about 20% is purchased joint ventures.[caption id="attachment_3170" align="aligncenter" width="600"] Short-Term Rentals: Short-term rentals allow you to do a lot of deals and impact real estate without having to invest a huge amount of money.[/caption] We've got a few. We purchased via subject-to, partnerships, joint ventures and our corporate program. What we do for subject-to is we're taking over the payments, taxes, HOA fees and commitment with these wholesalers or landlords or sellers. We're taking the deed over to our property, and we're staging. For example, we have a property in Hawthorne, Texas, which launched in December of 2019 and it consistently brings in an average of $7,500. We just have a $50,000 reservation for 62 nights. Before what we did a little bit under $7,500 but it averages $7,500.Our mortgage is 60, 48 and that's PITI all in. We do our cleaning and everything. We're all in for about $2,500 max utilities, $400 or $500 cleaning supplies, $2,500, so that's an $800 or $900 on top of our mortgage. Anything above $2,500 is profit. That's what I meant. Do you have any questions about that one?It was different of words. I was going to ask when you say rental arbitrage is that you get a master lease on the property. You lease it from the landlord, sublet it nightly on the short-term VRBO or Airbnb model. The master lease might not be the right word but you lease the house, pay the monthly, you divvy it out and book it. That's a very clean model. I create financing but I like to keep the numbers simple. To me, that keeps it simple.This is how I started. I needed cashflow to build a business. I didn't have the money to buy it. Even though I got into purchases several and we own about ten, we did not have the capital to buy a bunch. That was just the method. We don't use master leases but a master lease would speak, in a sense, more of a triple net lease, a commercial lease. It's closer to that when you control everything you take of the maintenance.Master lease, you take care of everything. You're taking care of your maintenance and all of that thing. With houses which is our method now, we don't go off with apartments anymore because the houses are ten times more profit. I'm just being very conservative. We utilize these residential leases. We do 2, 3 to 7-year leases with initial terms of a minimum 2 to 3 and second terms where we create that option for us."We have to take care of your property. Let's do a six-year term but I'm going to come in and rent your property for three years.” In our next two years, let's figure out, what is it that you need for rent increase? Most people right now are getting the max ever the rent. Rents are up by 20% here. We negotiate that second term and the rent increases as low as possible. It's got to be favorable for both parties and we would just focus on these longer leases. Everybody makes fun.That's your rental arbitrage. When you purchase, you get them sub-to. That's smart. I assume you leave it as long as you can in that original name. Do you put it into a trust?When we purchase sub-to, we put them into a trust immediately and one of my LLC is the trustee LLC. Then I've got a separate LLC that is the beneficiary. Then we just leave it there. Not saying that you don't run into issues. This is a creative finance strategy. Sometimes if the wholesaler doesn't do a good job explaining all of the little points that you've got to touch, all the disclosures, sometimes we run into an issue that is very unlucky that the seller falls for bankruptcy.Then it complicates the whole entire transaction. We're figuring this out with one of our sub-tos, but if you do it the right way, the only problem is that you can call the note due if they wish to. Most of the time, 95%, 97%, maybe 90%, it doesn't happen.I've never had a seller file bankruptcy but I did have a tenant one time in my failed Baytown rental property. The judge gave him four months of rent-free living. The bankruptcy is going to probably get messy before it gets clean. I would like to know about how that turns out for you? I know that you like to partner with your students.[bctt tweet="Buying profits is one thing, but buying properties with someone you're teaching is another." username=""]You offer coaching strictly in the short-term rental arena. I liked the model because you bring them up and then you become business partners with them. You got to be careful. A lot of the wholesalers, the first three deals you got to split with me. Once you train these folks up and you go into a JV, what does that look like?What we're doing is we're internally launching and we've launched it already. Nothing is out in the known yet in the community. What we do is we train these folks which our students are real estate investors because our focus is helping real estate investors get to that six-figure short-term rental cashflow.Sometimes some of these real estate investors are busy with their wholesaling business, realtor business. They're busy with their subject to creative finance business fix and flip or landlord. They have a lot of properties. What we do is we give them the option. There's no, "You have to partner. We come and train you." If you have too much on your plate, we give that only the students that have been qualified.Meaning, you've got to have an X credit score, pre-qualify, X amount of funds to be able to do that, because if we launch and buy properties. Buying properties is one thing but buying properties with someone you're teaching and making sure you do this on a consistent basis than others because you ran out of money and that messes the whole entire thing up.We do the option and our methods are very precautionary. I've called it location process frequents. We party with them 50/50. We go out there, find the deal and rehab it. The studio will purchase it in their LLC or their name or whatever. We use the student's cash or credit. The students bring into cash or credit and they bring into private money.In a sense, we teach them every step of the deal as if they were doing it because we're doing it together as partners. We teach them as far as so, the students come to the property with us to do the analysis of making sure that the property's numbers are going to work. We meet there to assess the rehab with the contractor. Then we also take them there. We deal with the rehab and we're showing them exactly the back end, the front end how the entire properties have staged the sign.They're not doing it themselves. We're doing it together. My team is providing the labor, the steps. They're seeing all the steps. Everything is getting executed and they're learning. Most people learn what they do. They're doing with us. Then we turn around and refine the property and deed it over onto our partnership LLC or limited partnership. We all make money. Go home. We have the process in the back. They can do whatever they want and pick the same process and then just rinse and repeat.In an average ballpark deal, how much does a student need to bring in private money? With sub-to, it’s going to be less but if you're getting in, what was the average buy-in? If I was going to fund one of your students, how much and how long would it need to be out?The average buy-in depends on the property but we estimate with the down payment costs, as we buy correctly, which is always 75% to 80%, 82% because you can't find anything above that. We're closing with a property this first week of June and this one is pretty much at 78%. They're putting up $40,000, $50,000 on the down payment side of the short-term loan.On the refinance, if all things work out, our appraisals are coming back, so I'll find out. After figuring out and seeing all the comps we're estimating, you never know what the place was, though but the market is fairly high right now. We're estimating anywhere between 4 or 25 for this deal, maybe 4 or 50. We're going to be in cash out of pocket 30 to 40 max, maybe even less.[caption id="attachment_3171" align="aligncenter" width="600"] Short-Term Rentals: Through rent arbitrage, one can lease the house, pay the monthly, divvy the finances, and then book it.[/caption] That includes the short-term loan, the rehab loan and all that. They're going to be cash out of pocket. Then after that, they are all refinanced but they are all carry across, which some tax could roll a little bit above or beyond if things get complicated. All the refinance there are costs for staging. For example, this property is 5,000 square feet but it's going to bring in about $15,000 to $20,000 a month.We are estimating about $25,000 to $30,000 on the furnace sheets and about $5,000 to $7,500 on the labor, maybe a little lower. You're putting 3540 plus 3540. Maybe a miscellaneous, we estimate 80 to 100 per deal but then you turn around and bring back in an average after the 50/50 split on this deal, our projections for the partner on that 80 to 100 is $3,000 to $4,000. If you do the Math times twelve, that's about 48% annually over a period of five years, which is our term. That's about 200% to 250% of IRR.When you bring it into the refi, are you going with community banks that are providing your refinancing?It's going to be either your credit union, an investor loan or just a regular type of financing. One of those three, depending because 80% cash-out refi and we're at 80% on the refi LTV, then we're good.You're not going to Freddie or Fannie to refinance these. What it means is that if you go to a traditional bank, you're going to get a lot of flak trying to refinance. When I've been refinanced out of bridge loans or acquisition loans, it's never been with the bank I'm familiar with but in some credit union or a community bank and they'll take it all day long because it's backed by real estate and the big banks won't touch it. I was curious. You are getting biz mortgages to refi. Let me just run through the timeline. You buy it, rehab it, appraise it. You're refinancing the short-term money for 3 to 6 months before you refi it?Up to six.Do you have a five-year term on that?Five-year term after we refi. That's when we decide, "We're going to sell or not." The market should be up. There is going to be a certain small cost you're going to have to do in five years.I understand that you are considering trying to put some money together for a fund so that you can have an ample supply. This is not an

Most people flip houses, become a landlord, or purchase properties to get the most returns in real estate. But for <a href="https://www.georgesalas360.com/" rel="nofollow" target="_blank">George Salas</a>, he found an incredible opportunity in short-term rentals, where a lot of people don't even consider. He joins Keith Baker to delve into how rent arbitrage increased his ROI significantly. He shares how he acquires his financing and puts together ample funding to keep the ball rolling. George also explains how he deepens relationships with the people that he trains, eventually building joint ventures.---<h2>George Salas On Getting Long-Lasting Revenue Through Short-Term Rentals</h2><h3>Learn How Rent Arbitrage Can Increase Your ROI</h3>If you're a regular reader to this show, then you know that I do my best to keep the topics of the interviews either strictly private lending-related or at least interesting from a different investment or personal perspective. The topic of the episode is no different as guest <a href="http://www.GeorgeSalas360.com" rel="nofollow" target="_blank">George Salas</a> is flip and crushing it in the short-term rental space.I met him at a Mastermind in Key West and I'm happy that we connected. I got on the plane to fly to Key West. I did not want to go. It had extremely limiting beliefs and yet is one of the best things I've done. I love to know stories of innovators and how people pivot when times change or when they get bad, and given the recent COVID scamdemic and the current bubble and the retail housing market.It's a real disease. All that stuff is over 99% survival rate. It's a flipping scamdemic. We are in a bubble. I'm calling it. Greenspan said, "You can't see a bubble until you're beyond it or it's burst." I'm calling it a bubble. More than $50,000 above ask in the market is a bubble. You can bookmark this show and can come back to it and give me grief or cheer me on when I'm proven right.I couldn't think of a better time to introduce you to my guest and his business model. The best thing of all is that George Salas is crushing the short-term rental game right here in Houston, in H-Town, which makes my smile a little bit bigger. Let's go ahead and get down to the brass tacks of the show and straight to the interview with George Salas.---<a href="http://www.GeorgeSalas360.com" rel="nofollow" target="_blank">George</a>, welcome to the show.Thank you very much, Keith. It is an absolute honor to be here.I'm looking forward to you to explain your business model. That is, you don't flip, landlord, own or finance but you do short-term rentals. I'm going to give you the floor. Tell us how you got into real estate, short-term rentals and the basic mechanics of your business.My journey started when I was six years old. I'm sitting in the living room of my parents' house. My mom and dad pulled my brother and me aside and said, "Guys, we need to talk to you. You're going to go to your grandma's. You're going to stay there for a little bit." This is from a city by the name of Lima in Peru, the capital. We moved to a small town.It was just my mom. It was an environment where I get to stand by my dad. We left that city into a small little town and then the town was 20,000 people. I didn't get to see my father for nine years but he came back again into my life. We were moving here to the US. I came when I was fifteen. I wouldn't get to say bye to him twice and it affected me my entire life until I realized that I didn't need to be better for my dad.I didn't need to be in a place I’m good enough because I felt I wasn't good enough. I felt that because my father was never a great provider. We moved here. All through my young 15, 18 to 20, I was a grocery stacker. I worked at Kmart. Then I got into the nightlife and I invested in a nightclub. I was in the nightlife for ten years. I was the number one top promoter in Houston for 7 or 8 years.[bctt tweet="Bad decisions aren't as bad if you learn from them. Turn everything around and make something completely drastic." username=""]All of a sudden, I had the opportunity to invest in a club. I had a bunch of money saved up. I did invest in the venue and then I ended up losing everything. Here I am in the city. I had invested $400,000 into a club that I didn't have control over. I didn't have knowledge about real estate. I lost every penny of it. I'm sitting in the living room of my apartment at the time and I don't know what to do with my life. I'm literally lost. My buddy Ben Franklin called me. We go to his property in Flint. We spent 3 to 4 hours there and something clicks in my head with all of this inspiration.That was a life life-changing phone call. I started training, taking courses, going to seminars. I went to a seminar in January of 2019. Four months later, I got my first flip. I did start flipping. I want it to be this real estate guy. I wanted to do a lot of deals and build an impact on real estate without knowing that you needed to have a lot of money to invest in real estate if you want to buy, fix and flip.You need $50,000, $60,000. For DLS, you do what we do. At the time, we didn't have the resources or knowledge to do it. I made $46,000 on my first flip in 2018. Then six months later, I figured out what wholesaling was. By the end of that year, I had brought $98,000 of wholesale fees and used that cash. This is from the $5,000 in my pocket keys.I use that cash to put into my first twenty rental arbitrage, Airbnb that had cashflowed me $2,500. It's little apartments, studios and I started with those. Since then, until now I've been able to build a six-figure business a month. Our short-term rental business does $150,000 a month. I've done 50 real estate deals in two and a half years.I've got an amazing network of friends like yourself and in the know of all of the real estate community here in Houston. I'm in the best time of my life. I'm happy, fulfilled, fulfilling my destiny. It all started with that phone call and making those bad decisions. Sometimes bad decisions aren't as bad if you can learn from them. If you can turn everything around and just make something completely drastic. Look for that thing that you're wanting to find, which was a success in real estate and then I reached out to short-term rentals. That's pretty much a breakdown.It's compelling because I find it funny that I had to go to Key West and meet you, even though we're right here in Houston. I've seen you come up on <a href="https://www.facebook.com/georgesalas360/" rel="nofollow" target="_blank">Facebook</a> back in the good old days when we went to REIA meetings in person. I'll even throw John Jackson in there in Dallas. I'll include him. It is a very good supportive network.The event, it's the same as I. It makes all the difference when you have people that you feel have your back or going to shoot you straight on something. To your point, if you mess up and you have a loss, it's either have a win or a lesson. That's the way it is. As long as you own the loss, then it's a lesson and you keep moving forward. You get into the typical way. You've wholesaled. By wholesaling, you know how to analyze a deal and see where the spread is and the margin, “What's the rehab going to cost this stuff?”As we were talking in the pre-show, you're buying single-family residences, condos or studios. The SFR, the single-family concept but you run them not like your normal rental. If you get $300 cashflow positive a month, you're doing well. You're bringing the apartment cashflow syndication model and that's what the short-term rentals do. When you acquire, how are you financing? Are you using a bank or private money? What mechanisms and cash are you using to acquire your property?When acquiring, we have a few strategies. I'm going to talk about purchase strategy and non-purchase. We use a method called rental arbitrage keys. This method breaks down like this. You go to a landlord, rent the property and ask them to allow you to sublease it on short-term rental platforms for 3, 4, 5, 6 to 30 days.That's one method and it doesn't require you buying the property. Utilizing this big real estate. I'm talking about 3,000, 4,000, 5,000 square foot homes without having a buyer. If they bring in anywhere between 5, 7, 8, 10, we've got several houses doing $15,000 up a month. I'm talking about that method. What we've purchased, which we also do, I would say 60% of our portfolio is rental arbitrage, 20% is purchased direct and about 20% is purchased joint ventures.[caption id="attachment_3170" align="aligncenter" width="600"] Short-Term Rentals: Short-term rentals allow you to do a lot of deals and impact real estate without having to invest a huge amount of money.[/caption] We've got a few. We purchased via subject-to, partnerships, joint ventures and our corporate program. What we do for subject-to is we're taking over the payments, taxes, HOA fees and commitment with these wholesalers or landlords or sellers. We're taking the deed over to our property, and we're staging. For example, we have a property in Hawthorne, Texas, which launched in December of 2019 and it consistently brings in an average of $7,500. We just have a $50,000 reservation for 62 nights. Before what we did a little bit under $7,500 but it averages $7,500.Our mortgage is 60, 48 and that's PITI all in. We do our cleaning and everything. We're all in for about $2,500 max utilities, $400 or $500 cleaning supplies, $2,500, so that's an $800 or $900 on top of our mortgage. Anything above $2,500 is profit. That's what I meant. Do you have any questions about that one?It was different of words. I was going to ask when you say rental arbitrage is that you get a master lease on the property. You lease it from the landlord, sublet it nightly on the short-term VRBO or Airbnb model. The master lease might not be the right word but you lease the house, pay the monthly, you divvy it out and book it. That's a very clean model. I create financing but I like to keep the numbers simple. To me, that keeps it simple.This is how I started. I needed cashflow to build a business. I didn't have the money to buy it. Even though I got into purchases several and we own about ten, we did not have the capital to buy a bunch. That was just the method. We don't use master leases but a master lease would speak, in a sense, more of a triple net lease, a commercial lease. It's closer to that when you control everything you take of the maintenance.Master lease, you take care of everything. You're taking care of your maintenance and all of that thing. With houses which is our method now, we don't go off with apartments anymore because the houses are ten times more profit. I'm just being very conservative. We utilize these residential leases. We do 2, 3 to 7-year leases with initial terms of a minimum 2 to 3 and second terms where we create that option for us."We have to take care of your property. Let's do a six-year term but I'm going to come in and rent your property for three years.” In our next two years, let's figure out, what is it that you need for rent increase? Most people right now are getting the max ever the rent. Rents are up by 20% here. We negotiate that second term and the rent increases as low as possible. It's got to be favorable for both parties and we would just focus on these longer leases. Everybody makes fun.That's your rental arbitrage. When you purchase, you get them sub-to. That's smart. I assume you leave it as long as you can in that original name. Do you put it into a trust?When we purchase sub-to, we put them into a trust immediately and one of my LLC is the trustee LLC. Then I've got a separate LLC that is the beneficiary. Then we just leave it there. Not saying that you don't run into issues. This is a creative finance strategy. Sometimes if the wholesaler doesn't do a good job explaining all of the little points that you've got to touch, all the disclosures, sometimes we run into an issue that is very unlucky that the seller falls for bankruptcy.Then it complicates the whole entire transaction. We're figuring this out with one of our sub-tos, but if you do it the right way, the only problem is that you can call the note due if they wish to. Most of the time, 95%, 97%, maybe 90%, it doesn't happen.I've never had a seller file bankruptcy but I did have a tenant one time in my failed Baytown rental property. The judge gave him four months of rent-free living. The bankruptcy is going to probably get messy before it gets clean. I would like to know about how that turns out for you? I know that you like to partner with your students.[bctt tweet="Buying profits is one thing, but buying properties with someone you're teaching is another." username=""]You offer coaching strictly in the short-term rental arena. I liked the model because you bring them up and then you become business partners with them. You got to be careful. A lot of the wholesalers, the first three deals you got to split with me. Once you train these folks up and you go into a JV, what does that look like?What we're doing is we're internally launching and we've launched it already. Nothing is out in the known yet in the community. What we do is we train these folks which our students are real estate investors because our focus is helping real estate investors get to that six-figure short-term rental cashflow.Sometimes some of these real estate investors are busy with their wholesaling business, realtor business. They're busy with their subject to creative finance business fix and flip or landlord. They have a lot of properties. What we do is we give them the option. There's no, "You have to partner. We come and train you." If you have too much on your plate, we give that only the students that have been qualified.Meaning, you've got to have an X credit score, pre-qualify, X amount of funds to be able to do that, because if we launch and buy properties. Buying properties is one thing but buying properties with someone you're teaching and making sure you do this on a consistent basis than others because you ran out of money and that messes the whole entire thing up.We do the option and our methods are very precautionary. I've called it location process frequents. We party with them 50/50. We go out there, find the deal and rehab it. The studio will purchase it in their LLC or their name or whatever. We use the student's cash or credit. The students bring into cash or credit and they bring into private money.In a sense, we teach them every step of the deal as if they were doing it because we're doing it together as partners. We teach them as far as so, the students come to the property with us to do the analysis of making sure that the property's numbers are going to work. We meet there to assess the rehab with the contractor. Then we also take them there. We deal with the rehab and we're showing them exactly the back end, the front end how the entire properties have staged the sign.They're not doing it themselves. We're doing it together. My team is providing the labor, the steps. They're seeing all the steps. Everything is getting executed and they're learning. Most people learn what they do. They're doing with us. Then we turn around and refine the property and deed it over onto our partnership LLC or limited partnership. We all make money. Go home. We have the process in the back. They can do whatever they want and pick the same process and then just rinse and repeat.In an average ballpark deal, how much does a student need to bring in private money? With sub-to, it’s going to be less but if you're getting in, what was the average buy-in? If I was going to fund one of your students, how much and how long would it need to be out?The average buy-in depends on the property but we estimate with the down payment costs, as we buy correctly, which is always 75% to 80%, 82% because you can't find anything above that. We're closing with a property this first week of June and this one is pretty much at 78%. They're putting up $40,000, $50,000 on the down payment side of the short-term loan.On the refinance, if all things work out, our appraisals are coming back, so I'll find out. After figuring out and seeing all the comps we're estimating, you never know what the place was, though but the market is fairly high right now. We're estimating anywhere between 4 or 25 for this deal, maybe 4 or 50. We're going to be in cash out of pocket 30 to 40 max, maybe even less.[caption id="attachment_3171" align="aligncenter" width="600"] Short-Term Rentals: Through rent arbitrage, one can lease the house, pay the monthly, divvy the finances, and then book it.[/caption] That includes the short-term loan, the rehab loan and all that. They're going to be cash out of pocket. Then after that, they are all refinanced but they are all carry across, which some tax could roll a little bit above or beyond if things get complicated. All the refinance there are costs for staging. For example, this property is 5,000 square feet but it's going to bring in about $15,000 to $20,000 a month.We are estimating about $25,000 to $30,000 on the furnace sheets and about $5,000 to $7,500 on the labor, maybe a little lower. You're putting 3540 plus 3540. Maybe a miscellaneous, we estimate 80 to 100 per deal but then you turn around and bring back in an average after the 50/50 split on this deal, our projections for the partner on that 80 to 100 is $3,000 to $4,000. If you do the Math times twelve, that's about 48% annually over a period of five years, which is our term. That's about 200% to 250% of IRR.When you bring it into the refi, are you going with community banks that are providing your refinancing?It's going to be either your credit union, an investor loan or just a regular type of financing. One of those three, depending because 80% cash-out refi and we're at 80% on the refi LTV, then we're good.You're not going to Freddie or Fannie to refinance these. What it means is that if you go to a traditional bank, you're going to get a lot of flak trying to refinance. When I've been refinanced out of bridge loans or acquisition loans, it's never been with the bank I'm familiar with but in some credit union or a community bank and they'll take it all day long because it's backed by real estate and the big banks won't touch it. I was curious. You are getting biz mortgages to refi. Let me just run through the timeline. You buy it, rehab it, appraise it. You're refinancing the short-term money for 3 to 6 months before you refi it?Up to six.Do you have a five-year term on that?Five-year term after we refi. That's when we decide, "We're going to sell or not." The market should be up. There is going to be a certain small cost you're going to have to do in five years.I understand that you are considering trying to put some money together for a fund so that you can have an ample supply. This is not an

PLP-136 George Salas On Getting Long-Lasting Revenue Through Short-Term Rentals

Hello Private Lender Nation!!!!If you’re looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place.But do you want to learn from my mistakes so you can both avoid and profit from them? Well then pull up a chair and pour yourself a drink, my friend. Because this podcast is just for you, as I am dedicated to giving people just like you and me the knowledge and confidence for successful and profitable Private Lending.In today’s episode, we will continue with our monthly lesson from the book by George Clason's the Richest Man in Babylon. Today’s lesson is the 5th cure for a small account balance, which is simply: Make your house a profitable investment, or in other words, own your own home. but before we get to the heart of the matter, first I need to do a little housekeeping.1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast.Private Lender Podcast Facebook Group2 – And most important of all, the Private Lender Academy still needs some work before I introduce her to the world and therefore I’m departing from the original plan in hopes of getting the course to life. However, on August 17th at 7:30pm CST, I am holding a webinar/Facebook Live where I will begin to teach the principles of the academy. The purpose of the webinar is to get 10 committed people to opt-in to group coaching where I teach you everything I know about originating private loans.As a result of participating in the group coaching, you will help me refine the PLA and receive a free copy of the course once it is complete. I am looking for 10 students to form this focus group that will help refine the course over a 4-week period beginning in late August.So head over the www.PrivateLenderAcademy.com and click on Apply NowApply – Private Lender AcademyOK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: the 5th cure for a lean account. And like so many lessons in life that we should heed, the principle is quite simple, but sometimes we humans seem to have trouble with the execution.Let’s get down to the brass tacks and listen to what Arkad tells his students:Make your house a profitable investment. A. K. A. - Own your Home"If a man sets aside none parts of his earnings upon which to live and enjoy life, and if any part of his nine parts can be turned into a profitable investment without detriment to his well-being, then so much fast will his treasures grow." So spoke Arkad to his class at their fifth lesson. "All too many of our men of Babylon do raise their families in unseemly quarters. They do pay to exacting landlords and liberal rents for rooms where their wives have not a spot to raise the blooms that gladden a woman's heart and their children have no place to play their games except in unclean alleys."No man's family can fully enjoy life unless they do have a plot of ground wherein children can play in the clean earth and where the wife may raise not only blossoms but good rich herbs to feed her family. "To a man's heart, it brings gladness to eat the figs from his own trees and the grapes of his own vines. To own your own home and to have it a place he is proud to care for, puts confidence in his heart and greater effort behind all his endeavors. Therefore, I recommend that every man own the roof that shelters him and his family. "Nor is it beyond the ability of any well-intentioned man to own his own home. Has not our great king so widely extended the walls of Babylon that within them much land is now unused and may be purchased at sums most reasonable? "Also, I say to you, my students, that the money lenders gladly consider the desires of men who seek homes and land for their families. Readily may one borrower to pay the brickmaker and the builder for such commendable purposes, if one can show a reasonable portion of the necessary sum which you yourself have provided for the purpose. "Then when the house is built, you can pay the moneylender with the same regularity as you did the landlord. Because each payment will reduce the amount you owe to the moneylender, a few years will satisfy his loan. "Then will your heart be glad because you will own in your own right a valuable piece of property and the only cost will be the king's taxes. "Also, will your wife go more often to the river to wash your robes, that each time she returns she may bring a goatskin of water to pour upon the growing things. "Thus come many blessings to the man who owns his own house. And greatly will it reduce his cost of living, making available more of his earnings for pleasures and the gratification of his desires. This, then, is the fifth cure for a lean purse. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice.It doesn’t take that long and it’s a small price for the value I try to provide.That’s gonna do it for Episode 135 and just a few final thoughts:1 – Join the Private Lender Podcast Facebook Group2 - Head over the www.PrivateLenderAcademy.com and click on Apply NowApply – Private Lender Academyif you would like to be part of the group coaching focus group. As I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending.I’ll catch you on the next episode.-k

Hello Private Lender Nation!!!!If you’re looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place.But do you want to learn from my mistakes so you can both avoid and profit from them? Well then pull up a chair and pour yourself a drink, my friend. Because this podcast is just for you, as I am dedicated to giving people just like you and me the knowledge and confidence for successful and profitable Private Lending.In today’s episode, we will continue with our monthly lesson from the book by George Clason's the Richest Man in Babylon. Today’s lesson is the 5th cure for a small account balance, which is simply: Make your house a profitable investment, or in other words, own your own home. but before we get to the heart of the matter, first I need to do a little housekeeping.1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast.<a href="https://www.facebook.com/groups/674936429994760" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a>2 – And most important of all, the Private Lender Academy still needs some work before I introduce her to the world and therefore I’m departing from the original plan in hopes of getting the course to life. However, on August 17th at 7:30pm CST, I am holding a webinar/Facebook Live where I will begin to teach the principles of the academy. The purpose of the webinar is to get 10 committed people to opt-in to group coaching where I teach you everything I know about originating private loans.As a result of participating in the group coaching, you will help me refine the PLA and receive a free copy of the course once it is complete. I am looking for 10 students to form this focus group that will help refine the course over a 4-week period beginning in late August.So head over the <a href="http://www.PrivateLenderAcademy.com" rel="nofollow" target="_blank">www.PrivateLenderAcademy.com</a> and click on Apply Now<a href="http://privatelenderacademy.com/apply/" rel="nofollow" target="_blank">Apply</a> <a href="http://privatelenderacademy.com/apply/" rel="nofollow" target="_blank">– Private Lender Academy</a>OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: the 5th cure for a lean account. And like so many lessons in life that we should heed, the principle is quite simple, but sometimes we humans seem to have trouble with the execution.Let’s get down to the brass tacks and listen to what Arkad tells his students:Make your house a profitable investment. A. K. A. - Own your Home"If a man sets aside none parts of his earnings upon which to live and enjoy life, and if any part of his nine parts can be turned into a profitable investment without detriment to his well-being, then so much fast will his treasures grow." So spoke Arkad to his class at their fifth lesson. "All too many of our men of Babylon do raise their families in unseemly quarters. They do pay to exacting landlords and liberal rents for rooms where their wives have not a spot to raise the blooms that gladden a woman's heart and their children have no place to play their games except in unclean alleys."No man's family can fully enjoy life unless they do have a plot of ground wherein children can play in the clean earth and where the wife may raise not only blossoms but good rich herbs to feed her family. "To a man's heart, it brings gladness to eat the figs from his own trees and the grapes of his own vines. To own your own home and to have it a place he is proud to care for, puts confidence in his heart and greater effort behind all his endeavors. Therefore, I recommend that every man own the roof that shelters him and his family. "Nor is it beyond the ability of any well-intentioned man to own his own home. Has not our great king so widely extended the walls of Babylon that within them much land is now unused and may be purchased at sums most reasonable? "Also, I say to you, my students, that the money lenders gladly consider the desires of men who seek homes and land for their families. Readily may one borrower to pay the brickmaker and the builder for such commendable purposes, if one can show a reasonable portion of the necessary sum which you yourself have provided for the purpose. "Then when the house is built, you can pay the moneylender with the same regularity as you did the landlord. Because each payment will reduce the amount you owe to the moneylender, a few years will satisfy his loan. "Then will your heart be glad because you will own in your own right a valuable piece of property and the only cost will be the king's taxes. "Also, will your wife go more often to the river to wash your robes, that each time she returns she may bring a goatskin of water to pour upon the growing things. "Thus come many blessings to the man who owns his own house. And greatly will it reduce his cost of living, making available more of his earnings for pleasures and the gratification of his desires. This, then, is the fifth cure for a lean purse. <ol><li>Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice.</li></ol>It doesn’t take that long and it’s a small price for the value I try to provide.That’s gonna do it for Episode 135 and just a few final thoughts:1 – Join the <a href="https://www.facebook.com/groups/674936429994760" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a>2 - Head over the <a href="http://www.PrivateLenderAcademy.com" rel="nofollow" target="_blank">www.PrivateLenderAcademy.com</a> and click on Apply Now<a href="http://privatelenderacademy.com/apply/" rel="nofollow" target="_blank">Apply</a> <a href="http://privatelenderacademy.com/apply/" rel="nofollow" target="_blank">– Private Lender Academy</a>if you would like to be part of the group coaching focus group. As I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending.I’ll catch you on the next episode.-k

PLP-135 The Fifth cure to a Lean Account Balance

Jonathan DeYoe

How does the state of our mind affect the way we make money decisions? You came to the right place to find out. Keith Baker’s guest today is Jonathan DeYoe, founder and CEO of Mindful Money. Jonathan explains to Keith Baker how mindfulness creates a space between the external stimulus and your response. It’s that moment of calm you need to make the right decisions based on facts instead of emotions. When you adapt mindfulness in your finances, you start making better decisions. How can you practice mindfulness? Tune in to find out!---Mindful Money: How To Make Better Money Decisions With Jonathan DeYoeInvesting In Your HappinessI'd like to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. If you want to learn from my mistakes so that you can both avoid and profit from them, then pull up a chair and pour yourself a drink because this show is just for you. I'm dedicated to giving people like you and me the knowledge and confidence for successful and profitable private lending.[caption id="attachment_3155" align="alignleft" width="194"] Mindful Money: Simple Practices for Reaching Your Financial Goals and Increasing Your Happiness Dividend[/caption]If you're looking to join a community of private lenders then head over to the Private Lender Podcast Facebook group to connect with other private lenders and to share experiences, stories and opinions. While you're at it, head on over to the PrivateLenderAcademy.com to learn more about the forthcoming course on private lending and click on Apply Now to register for pre-launch discounts and other goodies. I was a little skeptical when I first learned about our guest. I wasn't sure he'd be a good fit for the show at first because I didn't spend a whole lot of time digging too deep, but after speaking with him for a minute, I knew he had to be on the show so we booked it. I'm happy to share Jonathan DeYoe with you and hopefully introduce you to him.As I've shared in previous episodes, I am on a bit of a mindfulness journey. I like to sign off wishing you mindfulness from every episode. Given that life has happened to me in the last few years, divorce, etc., I'm happy that someone has applied the mindfulness approach to money. As I look back, I wish I would have applied mindfulness years ago especially to money because at least in my case, with the relationship with my ex, money wasn't a huge issue but it was large enough. If we both had been mindful about it, maybe things would have been different, at least on the money front. I’m not saying I'd still be married but the awareness and the understanding would have been a lot better. Such an approach can eliminate a lot of the money pains and ill feelings that couples have. Let's go ahead and get down to the brass tacks of this episode and get straight to the interview with Jonathan DeYoe.---Lender nation, I am throwing a curveball to you because we're not going to talk about private lending and all but we will be talking about money. Our guest has an interesting approach to money, one that I certainly want to use this platform to get out into the world and more people to learn and that is mindfulness. Early on in my practice, unfortunately, mindfulness was not court-ordered for me so I'm doing this on my own little by little. Jonathan DeYoe, welcome to the show.I'm excited to be here, Keith.Jonathan has nothing but good reviews on Yelp and whatnot. He is in the Berkeley, San Francisco Bay Area if you want to get in touch with him. This whole mindfulness thing, I don't have the words but you do. This is what you do on a daily. Let's start with your practice, your financial advising and how you bring that mindfulness element to the complete lack of financial literacy that is taught or the vacuum that is teaching financial literacy in the United States. Jonathan, the floor is yours.[bctt tweet="Mindfulness is when you create a space between the stimulus that the world gives and your response. " via="no"]Maybe a little background makes a lot of sense. In a brief nutshell, I'm a seminarian. I came to California to study at the Lutheran Seminary, turned Buddhist academic, turned financial advisor. The concept of mindful money comes after a long journey of self-discovery, comparative religion, philosophy, psychology and trying to figure out how people work and the decisions we make. I started in 1996 and wrote the book in 2007. After 10 or 11 years in the business, I had this semi-epiphany that it's the decisions we make that create our problems or our successes. The question is how are you making your decisions?If you have a space between “Oh my god,” or, “Yay,” and a decision where you can think, you can make a better decision. That's where mindfulness comes in. It’s creating that space between the stimulus that the world gives us and our response. Mindfulness has been studied and practiced for thousands of years, specifically to resolve this issue of our over-reactivity to the stuff that's coming at us from outside of us. It turns out in finance, there's a lot of that. Putting those two things together became exciting and became something that I was like, “I figured out. This is my mission. This is what I want to share with the world.”Before we got on, I sat on my stairs for a few minutes. I didn't meditate but I started noticing my breath. I’m trying to bring it in and give some of that space. When ADD was going around and all the rage in the late ‘70s and early ‘80s, my father was convinced I didn't need any medicine. I just needed a good ass whooping. That's all. I missed out on that boat so to speak. Had I gone down that route, my life would have been a little different in terms of disidentifying the news media, Instagram hits and all the stimuli that are coming in and molding decisions.I sat there, trying to find that space and not try to attach to any thought, which is hard. This interview was a guided meditation for me. You talked about that space and where this is all coming from. You are a seminarian which is awesome. It's funny because Friedrich Nietzsche was also studying to be a Lutheran minister before he went to the University of Bonn. You had a personal journey then you got to this point. You’ve been doing it for many years now. You have got to be the one lone voice in the darkness talking about mindful money. How do you convince people? How did you lead that horse to water?[caption id="attachment_3156" align="aligncenter" width="600"] Mindful Money: Don't take from the ‘serious money’ to refill the 2% money.[/caption] I almost didn't want to name the firm, Mindful Money. In 2001 when I started my own firm, I named it DeYoe Wealth Management until 2019. A couple of years ago, we changed the name. My book was published in 2017 and that's when I put it all together, mindfulness with money, why that's important and how to use those two things together. I was the only person talking about it and I thought that if I brought it out there, my peer group would say, “That's soft. That's silly. How can you say that? You're full of crap,” that kind of stuff and I would feel small.I discovered how much I'm afraid of not being believed in. I need people to trust me and to believe in me. If I don't have that, I don't value myself as much. That's a deeply personal thing. I'm coming to realize some things about myself after years and years of working too hard, trying too hard and all kinds of stuff. The fear of not being accepted in my industry where this philosophy or this belief system drove me to turn away from it for years and years. Finally, I said to my team, “This is what I want to do.” I girded myself for the barbs and they're like, “That's what you believe. That makes a ton of sense. Let's do this thing.”Now we're all together and doing this thing in the world. It's cool. We're not entirely alone. There are 3 or 4 books that are entitled Mindful Money. Years ago, somebody won a Nobel Prize for behavioral finance. Daniel Kahneman has a new book and I recommend this book, Noise. He used to talk about how we have all these biases and our biases are problematic. In my opinion, the benefit of mindfulness is it enables you to get over some of the biases. If you're aware of the biases and you're aware of your experience of the current environment, you can go, “I'm having an emotional response I don't need to have.”His latest book is all about noise. In our social media world, there is so much noise and there's much overwhelm. Our amygdala doesn't know how to deal with it. There are lions coming out of the bushes every step and we don't know what to do with us. Our bodies and our minds are not designed for this continuous constant threat and stress so we just react. Mindfulness becomes more and more important. Because there's an academic saying, “The benefit of an advisor isn't stock selection or investment selection, market timing.” Planning, education and behavioral support to help you do the right thing at the right time, not do the wrong thing at any specific time, not react. Act based on a plan. Stop reacting based on markets or something somebody said on a peer set or on the water cooler or whatever. We act based on a plan. We don't react to what the world is doing to us.The best illustration I have in my head for that is we ran out of toilet paper for a virus for the respiratory system. Not Kleenex. It’s not for sneezing and coughing. I was at the grocery store. There was a run on toilet paper. It’s herd mentality. I was right there. I'm one of the bad people. I admit it. I've instituted a par system so I don't have to worry about that. I used to work at a bar. Each bottle of liquor or each beer had a par. You always had to have ten bottles at any one time or the high-end scotch, you just had one. The cheap well vodka, you had twenty.[bctt tweet="The benefit of mindfulness is it allows you to get over biases. " via="no"]Being here on the Gulf Coast, we're used to hurricanes and being without things for a while. I keep updating my hurricane list. I don't do it just from June through November. It's a year-round thing. When Hurricane Harvey hit, my wife at the time was like, “How can you be so calm?” I'm an insurance adjuster so I deal with risks and bad things all the time. I told her, “This is an act of God. We've prepared as much as we can and we're fully insured. I confirmed all insurance premiums have been paid like flood and windstorm. We're good. We've done everything that we can.” She got mad at me when I threw a party to watch the pay-per-view fight right in the middle of Harvey because I was calm. I didn't have to react. I was prepared. It went a long way of trying to confirm. What you're saying resonates and hits home.This is a story that my dad told me. This is the Cold War era. He's in the Navy. There was this guy on the plane that was always calm and he was very analytical. If there's ever an issue, turbulence or something was happening, my dad would look at the guy and he would say, “Is he calm? If he was calm, we're steady and we're good.” There was this period where they were to land in Iceland but an engine blew. They're like, “What's going to happen? Are we going to be able to make it back? Are we going to go into the ocean?” They’re not sure what's going to happen. They were doing reconnaissance. They were looking for submarines from the air.That engine blows and they're trying to get back to Iceland. He's looking at the guy and the guy's like, “We got this. We're fine.” He's calculating and figuring it out. The other engine blows and they're like, “We have to start ditching stuff into the ocean. We have to start pushing stuff out the door so we have enough lift. We got to stay above so we can get to the coast and land this thing.” He keeps looking at the guy and the guy is calm. They pushed some things out the door and the guy is totally calm. He goes, “Now we get it. We have to lose another 300 pounds. If we can lose 300 pounds, we're going to make it all the way.” No engines. They're just soaring.He keeps looking at a guy. The point of the whole story is we need the guy. In Hurricane Harvey, you were the guy. We need to have something to look at that is calm and collected because if we don't have that, we all lose our minds if we don’t have somebody that's like, “Wait. Back up a second. This is normal. It's an act of God. These things happen. We prepare the best we can and we go forward.” Be the guy.Welcome to Houston. I don't know what to tell you. We do have good weather for about two weeks a year and it's not humid. It's pleasant. We get a lot of snowbirds coming down for the winter and whatnot. I don't want to throw my parents under the bus but a little peek inside of things. On a Sunday morning, I went to my mom's house. My dad passed away so we're going through the stuff. I'm making sure mom’s all right. My sister lives close to her and my nephew is with her so that's all good.My dad had a Master's in Chemistry and I was like, “There's his thesis. I'd like to keep that.” That's a trinket that I'm cool with. I'll dust it every week. We got to this and mom started laughing. She's like, “From 1967, here’s a certificate of completion from a financial education class.” My dad was not the best with money so we started laughing about how funny it was that he took financial education literacy class. I started thinking, “He didn't die in debt. He was in the black. He wasn't in the red.” I started thinking about that and I was laughing about it.You don't have to be good. You just have to be consistent. Having that background of money and being that middle-class aspiring like, “Do you want to be rich and famous?” “No. I want to be rich. I don't want to be famous. I don't want people to know I'm rich.” When it comes to being mindful with money and budgeting, I can definitely see where if you can give yourself a little bit of space and get quiet, you're budgeting your allocation to retirement, vacation fund and all that. I would imagine once people get into that, your job is easy at that point.[caption id="attachment_3157" align="aligncenter" width="600"] Mindful Money: The first rule of investing is to manage your risk.[/caption] The most difficult thing we have and we do this with all of our clients is we walk through the planning process. In the planning process, we remove the crazy. For example, like a Bitcoin. We remove the investment that would act like a GameStop or an options trader. We remove the expectation of the upside and the downside. We look at averages, long-term, cashflows, spending and making decisions based on things that give us higher probability outcomes. By removing the crazy, we create ground rules on how people work with money.Whenever stress occurs, they’re like, “What is the plan you told me I’m supposed to do? I'm supposed to save this much every month, invest this way every month and rebalance on a regular basis. Keep it simple.” If you keep it simple, you end up getting the things that you want out of life. If you get sucked into the crazy, which there's plenty of crazy to get sucked into, you lose out on the higher probabilities that you're hoping for. You lose out on the probability of the kids going to school without debt, their retirement income you can't outlive and the legacy you want to live behind. By going into the crazy, you lose out on the higher probability path to get where you want to go.We talk about the plan and the meditation. You sit down and you focus on your breath. You sat in the staircase before we got on here and you focused on your breath. You're in, out. That focuses and desensitizes you to everything's going on around you. In personal finance, your plan is your breath. It is the thing you focus on. When all the world is going crazy, you go, “What are those four simple things I'm supposed to do?” That's the benefit of planning. Once you have a plan in place and you have a portfolio that reflects the plan, we're not portfolio wizards, we admit it. No one's a portfolio wizard. Everyone is either lucky or unlucky. We are allocated and diversified.Thank you for being the first in the industry to admit that.There are no wizards. No one can predict the future. No one can guess what's going to happen next but there's still a way to build a portfolio. There's still a way to strategize on finance. We use those ways and then we're patient and we're disciplined and the plan enables that. When somebody says, “What about this thing?” I say, “Let's go look at the plan and see what the plan says about that.” Keep it simple. That's how we get from where we are to where we want to go.My dad showed me a video on how Post-it Notes recreated at 3M and the research scientist had 3%, 5% or whatever their annual budget was supposed to be dedicated for whatever they want. This guy wanted something to mark pages in this hymnal when he's singing in the church choir. It’s simple things like that but I always think you should always have that gambling money. When Bitcoin does come along, it's like, “We got the fear of missing out,” which only puts you into a state of lack and wanting and is not great. If you still want to scratch that itch, I'm a firm believer in, “Fine. Take that 0.5% or 1% of whatever you've allocated in your plan and know that you're going to lose it anyway.” It's like going to Vegas. “I'm going to take $1,000 to Vegas and piss it away. I'm coming home.” To me, that mentality is a healthy part of what we call asset allocation.[bctt tweet="When you keep it simple, you end up getting the things you want in life. " via="no"]Back when Steve Jobs was accepting an investment from Microsoft in the late ‘90s or early 2000s, Apple’s on the ropes. Apple is dying. They are not going to survive. They need capital. We had a couple of clients that said, “It looks like Microsoft's going to make this investment. Apple's got great products.” If you're an Apple user, you are an Apple user. You've got the phone, the watch, computer, iPad or laptop. You've got...

How does the state of our mind affect the way we make money decisions? You came to the right place to find out. Keith Baker’s guest today is <a href="https://www.linkedin.com/in/jonathandeyoe/" rel="nofollow" target="_blank">Jonathan DeYoe</a>, founder and CEO of <a href="https://mindful.money/" rel="nofollow" target="_blank">Mindful Money</a>. Jonathan explains to Keith Baker how mindfulness creates a space between the external stimulus and your response. It’s that moment of calm you need to make the right decisions based on facts instead of emotions. When you adapt mindfulness in your finances, you start making better decisions. How can you practice mindfulness? Tune in to find out!---<h2>Mindful Money: How To Make Better Money Decisions With Jonathan DeYoe</h2><h3>Investing In Your Happiness</h3>I'd like to thank you for sharing your time with me. If you're looking for practical tips and advice on how to put the power of the banking system into your investment accounts, then you are in the right place. If you want to learn from my mistakes so that you can both avoid and profit from them, then pull up a chair and pour yourself a drink because this show is just for you. I'm dedicated to giving people like you and me the knowledge and confidence for successful and profitable private lending.[caption id="attachment_3155" align="alignleft" width="194"] Mindful Money: Simple Practices for Reaching Your Financial Goals and Increasing Your Happiness Dividend[/caption]If you're looking to join a community of private lenders then head over to the <a href="https://www.facebook.com/groups/674936429994760/" rel="nofollow" target="_blank">Private Lender Podcast</a> Facebook group to connect with other private lenders and to share experiences, stories and opinions. While you're at it, head on over to the <a href="http://www.privatelenderacademy.com" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a> to learn more about the forthcoming course on private lending and click on Apply Now to register for pre-launch discounts and other goodies. I was a little skeptical when I first learned about our guest. I wasn't sure he'd be a good fit for the show at first because I didn't spend a whole lot of time digging too deep, but after speaking with him for a minute, I knew he had to be on the show so we booked it. I'm happy to share <a href="https://mindful.money/" rel="nofollow" target="_blank">Jonathan DeYoe</a> with you and hopefully introduce you to him.As I've shared in previous episodes, I am on a bit of a mindfulness journey. I like to sign off wishing you mindfulness from every episode. Given that life has happened to me in the last few years, divorce, etc., I'm happy that someone has applied the mindfulness approach to money. As I look back, I wish I would have applied mindfulness years ago especially to money because at least in my case, with the relationship with my ex, money wasn't a huge issue but it was large enough. If we both had been mindful about it, maybe things would have been different, at least on the money front. I’m not saying I'd still be married but the awareness and the understanding would have been a lot better. Such an approach can eliminate a lot of the money pains and ill feelings that couples have. Let's go ahead and get down to the brass tacks of this episode and get straight to the interview with Jonathan DeYoe.---Lender nation, I am throwing a curveball to you because we're not going to talk about private lending and all but we will be talking about money. Our guest has an interesting approach to money, one that I certainly want to use this platform to get out into the world and more people to learn and that is mindfulness. Early on in my practice, unfortunately, mindfulness was not court-ordered for me so I'm doing this on my own little by little. <a href="https://mindful.money/" rel="nofollow" target="_blank">Jonathan DeYoe</a>, welcome to the show.I'm excited to be here, Keith.Jonathan has nothing but good reviews on Yelp and whatnot. He is in the Berkeley, San Francisco Bay Area if you want to get in touch with him. This whole mindfulness thing, I don't have the words but you do. This is what you do on a daily. Let's start with your practice, your financial advising and how you bring that mindfulness element to the complete lack of financial literacy that is taught or the vacuum that is teaching financial literacy in the United States. Jonathan, the floor is yours.[bctt tweet="Mindfulness is when you create a space between the stimulus that the world gives and your response. " via="no"]Maybe a little background makes a lot of sense. In a brief nutshell, I'm a seminarian. I came to California to study at the Lutheran Seminary, turned Buddhist academic, turned financial advisor. The concept of mindful money comes after a long journey of self-discovery, comparative religion, philosophy, psychology and trying to figure out how people work and the decisions we make. I started in 1996 and wrote the book in 2007. After 10 or 11 years in the business, I had this semi-epiphany that it's the decisions we make that create our problems or our successes. The question is how are you making your decisions?If you have a space between “Oh my god,” or, “Yay,” and a decision where you can think, you can make a better decision. That's where mindfulness comes in. It’s creating that space between the stimulus that the world gives us and our response. Mindfulness has been studied and practiced for thousands of years, specifically to resolve this issue of our over-reactivity to the stuff that's coming at us from outside of us. It turns out in finance, there's a lot of that. Putting those two things together became exciting and became something that I was like, “I figured out. This is my mission. This is what I want to share with the world.”Before we got on, I sat on my stairs for a few minutes. I didn't meditate but I started noticing my breath. I’m trying to bring it in and give some of that space. When ADD was going around and all the rage in the late ‘70s and early ‘80s, my father was convinced I didn't need any medicine. I just needed a good ass whooping. That's all. I missed out on that boat so to speak. Had I gone down that route, my life would have been a little different in terms of disidentifying the news media, Instagram hits and all the stimuli that are coming in and molding decisions.I sat there, trying to find that space and not try to attach to any thought, which is hard. This interview was a guided meditation for me. You talked about that space and where this is all coming from. You are a seminarian which is awesome. It's funny because Friedrich Nietzsche was also studying to be a Lutheran minister before he went to the University of Bonn. You had a personal journey then you got to this point. You’ve been doing it for many years now. You have got to be the one lone voice in the darkness talking about mindful money. How do you convince people? How did you lead that horse to water?[caption id="attachment_3156" align="aligncenter" width="600"] Mindful Money: Don't take from the ‘serious money’ to refill the 2% money.[/caption] I almost didn't want to name the firm, Mindful Money. In 2001 when I started my own firm, I named it DeYoe Wealth Management until 2019. A couple of years ago, we changed the name. My book was published in 2017 and that's when I put it all together, mindfulness with money, why that's important and how to use those two things together. I was the only person talking about it and I thought that if I brought it out there, my peer group would say, “That's soft. That's silly. How can you say that? You're full of crap,” that kind of stuff and I would feel small.I discovered how much I'm afraid of not being believed in. I need people to trust me and to believe in me. If I don't have that, I don't value myself as much. That's a deeply personal thing. I'm coming to realize some things about myself after years and years of working too hard, trying too hard and all kinds of stuff. The fear of not being accepted in my industry where this philosophy or this belief system drove me to turn away from it for years and years. Finally, I said to my team, “This is what I want to do.” I girded myself for the barbs and they're like, “That's what you believe. That makes a ton of sense. Let's do this thing.”Now we're all together and doing this thing in the world. It's cool. We're not entirely alone. There are 3 or 4 books that are entitled <a href="https://www.amazon.com/gp/product/B01N0XMEWE/ref=dbs_a_def_rwt_hsch_vapi_taft_p1_i0" rel="nofollow" target="_blank">Mindful Money</a>. Years ago, somebody won a Nobel Prize for behavioral finance. Daniel Kahneman has a new book and I recommend this book, <a href="https://www.amazon.com/Noise-Human-Judgment-Daniel-Kahneman/dp/0316451401" rel="nofollow" target="_blank">Noise</a>. He used to talk about how we have all these biases and our biases are problematic. In my opinion, the benefit of mindfulness is it enables you to get over some of the biases. If you're aware of the biases and you're aware of your experience of the current environment, you can go, “I'm having an emotional response I don't need to have.”His latest book is all about noise. In our social media world, there is so much noise and there's much overwhelm. Our amygdala doesn't know how to deal with it. There are lions coming out of the bushes every step and we don't know what to do with us. Our bodies and our minds are not designed for this continuous constant threat and stress so we just react. Mindfulness becomes more and more important. Because there's an academic saying, “The benefit of an advisor isn't stock selection or investment selection, market timing.” Planning, education and behavioral support to help you do the right thing at the right time, not do the wrong thing at any specific time, not react. Act based on a plan. Stop reacting based on markets or something somebody said on a peer set or on the water cooler or whatever. We act based on a plan. We don't react to what the world is doing to us.The best illustration I have in my head for that is we ran out of toilet paper for a virus for the respiratory system. Not Kleenex. It’s not for sneezing and coughing. I was at the grocery store. There was a run on toilet paper. It’s herd mentality. I was right there. I'm one of the bad people. I admit it. I've instituted a par system so I don't have to worry about that. I used to work at a bar. Each bottle of liquor or each beer had a par. You always had to have ten bottles at any one time or the high-end scotch, you just had one. The cheap well vodka, you had twenty.[bctt tweet="The benefit of mindfulness is it allows you to get over biases. " via="no"]Being here on the Gulf Coast, we're used to hurricanes and being without things for a while. I keep updating my hurricane list. I don't do it just from June through November. It's a year-round thing. When Hurricane Harvey hit, my wife at the time was like, “How can you be so calm?” I'm an insurance adjuster so I deal with risks and bad things all the time. I told her, “This is an act of God. We've prepared as much as we can and we're fully insured. I confirmed all insurance premiums have been paid like flood and windstorm. We're good. We've done everything that we can.” She got mad at me when I threw a party to watch the pay-per-view fight right in the middle of Harvey because I was calm. I didn't have to react. I was prepared. It went a long way of trying to confirm. What you're saying resonates and hits home.This is a story that my dad told me. This is the Cold War era. He's in the Navy. There was this guy on the plane that was always calm and he was very analytical. If there's ever an issue, turbulence or something was happening, my dad would look at the guy and he would say, “Is he calm? If he was calm, we're steady and we're good.” There was this period where they were to land in Iceland but an engine blew. They're like, “What's going to happen? Are we going to be able to make it back? Are we going to go into the ocean?” They’re not sure what's going to happen. They were doing reconnaissance. They were looking for submarines from the air.That engine blows and they're trying to get back to Iceland. He's looking at the guy and the guy's like, “We got this. We're fine.” He's calculating and figuring it out. The other engine blows and they're like, “We have to start ditching stuff into the ocean. We have to start pushing stuff out the door so we have enough lift. We got to stay above so we can get to the coast and land this thing.” He keeps looking at the guy and the guy is calm. They pushed some things out the door and the guy is totally calm. He goes, “Now we get it. We have to lose another 300 pounds. If we can lose 300 pounds, we're going to make it all the way.” No engines. They're just soaring.He keeps looking at a guy. The point of the whole story is we need the guy. In Hurricane Harvey, you were the guy. We need to have something to look at that is calm and collected because if we don't have that, we all lose our minds if we don’t have somebody that's like, “Wait. Back up a second. This is normal. It's an act of God. These things happen. We prepare the best we can and we go forward.” Be the guy.Welcome to Houston. I don't know what to tell you. We do have good weather for about two weeks a year and it's not humid. It's pleasant. We get a lot of snowbirds coming down for the winter and whatnot. I don't want to throw my parents under the bus but a little peek inside of things. On a Sunday morning, I went to my mom's house. My dad passed away so we're going through the stuff. I'm making sure mom’s all right. My sister lives close to her and my nephew is with her so that's all good.My dad had a Master's in Chemistry and I was like, “There's his thesis. I'd like to keep that.” That's a trinket that I'm cool with. I'll dust it every week. We got to this and mom started laughing. She's like, “From 1967, here’s a certificate of completion from a financial education class.” My dad was not the best with money so we started laughing about how funny it was that he took financial education literacy class. I started thinking, “He didn't die in debt. He was in the black. He wasn't in the red.” I started thinking about that and I was laughing about it.You don't have to be good. You just have to be consistent. Having that background of money and being that middle-class aspiring like, “Do you want to be rich and famous?” “No. I want to be rich. I don't want to be famous. I don't want people to know I'm rich.” When it comes to being mindful with money and budgeting, I can definitely see where if you can give yourself a little bit of space and get quiet, you're budgeting your allocation to retirement, vacation fund and all that. I would imagine once people get into that, your job is easy at that point.[caption id="attachment_3157" align="aligncenter" width="600"] Mindful Money: The first rule of investing is to manage your risk.[/caption] The most difficult thing we have and we do this with all of our clients is we walk through the planning process. In the planning process, we remove the crazy. For example, like a Bitcoin. We remove the investment that would act like a GameStop or an options trader. We remove the expectation of the upside and the downside. We look at averages, long-term, cashflows, spending and making decisions based on things that give us higher probability outcomes. By removing the crazy, we create ground rules on how people work with money.Whenever stress occurs, they’re like, “What is the plan you told me I’m supposed to do? I'm supposed to save this much every month, invest this way every month and rebalance on a regular basis. Keep it simple.” If you keep it simple, you end up getting the things that you want out of life. If you get sucked into the crazy, which there's plenty of crazy to get sucked into, you lose out on the higher probabilities that you're hoping for. You lose out on the probability of the kids going to school without debt, their retirement income you can't outlive and the legacy you want to live behind. By going into the crazy, you lose out on the higher probability path to get where you want to go.We talk about the plan and the meditation. You sit down and you focus on your breath. You sat in the staircase before we got on here and you focused on your breath. You're in, out. That focuses and desensitizes you to everything's going on around you. In personal finance, your plan is your breath. It is the thing you focus on. When all the world is going crazy, you go, “What are those four simple things I'm supposed to do?” That's the benefit of planning. Once you have a plan in place and you have a portfolio that reflects the plan, we're not portfolio wizards, we admit it. No one's a portfolio wizard. Everyone is either lucky or unlucky. We are allocated and diversified.Thank you for being the first in the industry to admit that.There are no wizards. No one can predict the future. No one can guess what's going to happen next but there's still a way to build a portfolio. There's still a way to strategize on finance. We use those ways and then we're patient and we're disciplined and the plan enables that. When somebody says, “What about this thing?” I say, “Let's go look at the plan and see what the plan says about that.” Keep it simple. That's how we get from where we are to where we want to go.My dad showed me a video on how Post-it Notes recreated at 3M and the research scientist had 3%, 5% or whatever their annual budget was supposed to be dedicated for whatever they want. This guy wanted something to mark pages in this hymnal when he's singing in the church choir. It’s simple things like that but I always think you should always have that gambling money. When Bitcoin does come along, it's like, “We got the fear of missing out,” which only puts you into a state of lack and wanting and is not great. If you still want to scratch that itch, I'm a firm believer in, “Fine. Take that 0.5% or 1% of whatever you've allocated in your plan and know that you're going to lose it anyway.” It's like going to Vegas. “I'm going to take $1,000 to Vegas and piss it away. I'm coming home.” To me, that mentality is a healthy part of what we call asset allocation.[bctt tweet="When you keep it simple, you end up getting the things you want in life. " via="no"]Back when Steve Jobs was accepting an investment from Microsoft in the late ‘90s or early 2000s, Apple’s on the ropes. Apple is dying. They are not going to survive. They need capital. We had a couple of clients that said, “It looks like Microsoft's going to make this investment. Apple's got great products.” If you're an Apple user, you are an Apple user. You've got the phone, the watch, computer, iPad or laptop. You've got...

PLP-134 Mindful Money: How To Make Better Money Decisions With Jonathan DeYoe

The Fourth Law of GoldHello, Lender nation and welcome to Episode 133 of the Private Lender Podcast! I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today. I hope everyone is enjoying their 4th of July observance the day this episode goes live, and to the other 194 countries not named the united states of America, then I hope you have a good Monday!Love the show? Subscribe, rate, review, and share! Here’s How »If you’re looking for practical tips and advice on Private Lending and how to keep your money safe, then you are in the right place. But if you want to learn from my mistakes so you can both avoid and profit from them, well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you!Today we continue with the lessons taken from the book The Richest Man in Babylon: the fourth law of wealth. This is but one old-world principle that has remained relevant and true through the centuries, no matter the currency, and no matter the political climate.But before we get to the brass tacks, I would like to perform the housekeeping:1 - Have you joined the Private Lender Podcast Facebook group? Well, why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast. Private Lender Podcast Facebook Group2 – And most important of all, the Private Lender Academy is launching in just a few weeks and if you would like to get on the list for pre-launch bonuses like discount codes, then head over to PrivateLenderAcademy.com and click on “Apply Now”: provide some background on your investing experience and goalsApply – Private Lender AcademyThe Private Lender Academy is slated to launch after July 4th, 2021.OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: the 4th Law of Wealth (Gold).In the book, the Richest Man in Babylon, there are 7 cures for a lean purse, and 5 laws of Gold (wealth) and today we will discuss the 4th law of wealth, which is simply:“Gold slips away from the man who invests it in businesses or purposes with which he is not familiar, or which are not approved by those skilled in its keep.”“To the man who has gold, yet is not skilled in its handling, many uses for it appear most profitable. Too often these are fraught with the danger of loss, and if properly analyzed by wise men, show small possibility of profit. Therefore, the inexperienced owner of gold who trusts to his own judgement and invest it in businesses or purposes with which he is not familiar, too often find his judgement imperfect, and pays with his treasure for his inexperience. Wise, indeed, is he who invests his treasures under the advise of men skilled in the ways of gold.”The lesson here is simple: seek the advice from those who have a successful track record of investing theirs, and other people’s money, to help ensure your success. Gather opinions and seek counsel from proven investment strategies.Do not get caught up in the swell of a bubble market when “everyone is doing it” or “it’s so easy, why aren’t you doing it?” Do not bet your treasure on the shiny object.But rather seek friendship, fellowship, counsel, and advice from those skilled in successfully handling and investing money. Let them help guide you beyond the wolves and the hype of speculation.Remember, you’re net worth is equal to your network. No go out and find such people to help stay safe and invest with logic rather than emotion.Ok, the sermon is over. Thank you for listening.Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at Google Podcast, Spotify or whatever platform you are using to hear my voice.But it would mean the world to me if you could leave an honest rating and review over at iTunes, because it's apple and they're still the benchmark.It doesn’t take that long and it’s a small price for the value I try to provide – for free.And if you are looking to create your stable of private lenders, or know people who have money but don’t realize the power of private lending, please, please send them a text, an email, a DM, and introduce them to me and the Private Lender Podcast so they can develop the skills and confidence to become a successful Private Lender.That’s gonna do it for Episode 133 and I’d like to provide you with a few final thoughts: 1 – Join the Private Lender Podcast Facebook Group 2 - Remember, the http://privatelenderacademy.com/ will launch in July 2021. Head over to http://privatelenderacademy.com  for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now”So, as I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending.I’ll catch you on the next episode. -k Important Links:Private Lender Podcast Group – FacebookPrivateLenderAcademy.comMarch 2021 Due Diligence for Private Lenders – Previous episodeGoogle Podcasts – The Private Lender PodcastSpotify – The Private Lender PodcastiHeartRadio – The Private Lender PodcastSoundCloud – The Private Lender PodcastiTunes – The Private Lender PodcastLove the show? Subscribe, rate, review, and share!Here’s How » Join the Private Lender Podcast community today:PrivateLenderPodcast.comPrivate Lender Podcast FacebookKeith Baker on LinkedInPrivate Lender Podcast TwitterPrivate Lender Podcast YouTube

<h1>The Fourth Law of Gold</h1>Hello, Lender nation and welcome to Episode 133 of the Private Lender Podcast! I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today. I hope everyone is enjoying their 4th of July observance the day this episode goes live, and to the other 194 countries not named the united states of America, then I hope you have a good Monday!Love the show? Subscribe, rate, review, and share! <a href="http://privatelenderpodcast.com/blog/how-to-subscribe-rate-our-podcast-5-stars-on-itunes/" rel="nofollow" target="_blank">Here’s How »</a>If you’re looking for practical tips and advice on Private Lending and how to keep your money safe, then you are in the right place. But if you want to learn from my mistakes so you can both avoid and profit from them, well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you!Today we continue with the lessons taken from the book The Richest Man in Babylon: the fourth law of wealth. This is but one old-world principle that has remained relevant and true through the centuries, no matter the currency, and no matter the political climate.But before we get to the brass tacks, I would like to perform the housekeeping:1 - Have you joined the <a href="https://www.facebook.com/PrivateLenderPodcast/" rel="nofollow" target="_blank">Private Lender Podcast Facebook group</a>? Well, why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast. <a href="https://www.facebook.com/PrivateLenderPodcast/" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a>2 – And most important of all, the <a href="http://www.privatelenderacademy.com/" rel="nofollow" target="_blank">Private Lender Academy</a> is launching in just a few weeks and if you would like to get on the list for pre-launch bonuses like discount codes, then head over to <a href="http://PrivateLenderAcademy.com" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a> and click on “Apply Now”: provide some background on your investing experience and goals<a href="http://privatelenderacademy.com/apply/" rel="nofollow" target="_blank">Apply – Private Lender Academy</a>The Private Lender Academy is slated to launch after July 4th, 2021.OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: the 4th Law of Wealth (Gold).In the book, the Richest Man in Babylon, there are 7 cures for a lean purse, and 5 laws of Gold (wealth) and today we will discuss the 4th law of wealth, which is simply:<h2>“Gold slips away from the man who invests it in businesses or purposes with which he is not familiar, or which are not approved by those skilled in its keep.”</h2><h4>“To the man who has gold, yet is not skilled in its handling, many uses for it appear most profitable. Too often these are fraught with the danger of loss, and if properly analyzed by wise men, show small possibility of profit. Therefore, the inexperienced owner of gold who trusts to his own judgement and invest it in businesses or purposes with which he is not familiar, too often find his judgement imperfect, and pays with his treasure for his inexperience. Wise, indeed, is he who invests his treasures under the advise of men skilled in the ways of gold.”</h4>The lesson here is simple: seek the advice from those who have a successful track record of investing theirs, and other people’s money, to help ensure your success. Gather opinions and seek counsel from proven investment strategies.Do not get caught up in the swell of a bubble market when “everyone is doing it” or “it’s so easy, why aren’t you doing it?” Do not bet your treasure on the shiny object.But rather seek friendship, fellowship, counsel, and advice from those skilled in successfully handling and investing money. Let them help guide you beyond the wolves and the hype of speculation.Remember, you’re net worth is equal to your network. No go out and find such people to help stay safe and invest with logic rather than emotion.Ok, the sermon is over. Thank you for listening.Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at Google Podcast, Spotify or whatever platform you are using to hear my voice.But it would mean the world to me if you could leave an honest rating and review over at iTunes, because it's apple and they're still the benchmark.It doesn’t take that long and it’s a small price for the value I try to provide – for free.And if you are looking to create your stable of private lenders, or know people who have money but don’t realize the power of private lending, please, please send them a text, an email, a DM, and introduce them to me and the Private Lender Podcast so they can develop the skills and confidence to become a successful Private Lender.That’s gonna do it for Episode 133 and I’d like to provide you with a few final thoughts: 1 – Join the <a href="https://www.facebook.com/PrivateLenderPodcast/" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a> 2 - Remember, the <a href="http://privatelenderacademy.com/" rel="nofollow" target="_blank">http://privatelenderacademy.com/</a> will launch in July 2021. Head over to <a href="http://privatelenderacademy.com" rel="nofollow" target="_blank">http://privatelenderacademy.com </a> for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now”So, as I sign off I’d like to say in addition to self-awareness and mindfulness, I wish you safe and prosperous Private Lending.I’ll catch you on the next episode. -k Important Links:<ul><li><a href="https://www.facebook.com/groups/360119521502949" rel="nofollow" target="_blank">Private Lender Podcast Group</a> – Facebook</li><li><a href="http://www.privatelenderacademy.com/" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a></li><li><a href="http://privatelenderpodcast.com/episodes/plp-119/" rel="nofollow" target="_blank">March 2021 Due Diligence for Private Lenders</a> – Previous episode</li><li><a href="https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5jYXB0aXZhdGUuZm0vdGhlcHJpdmF0ZWxlbmRlcnBvZGNhc3Qv" rel="nofollow" target="_blank">Google Podcasts</a> – The Private Lender Podcast</li><li><a href="https://open.spotify.com/show/4nhQSNa6ObSdAJ0z75JGMu" rel="nofollow" target="_blank">Spotify</a> – The Private Lender Podcast</li><li><a href="https://www.iheart.com/podcast/256-the-private-lender-pod-31152347/" rel="nofollow" target="_blank">iHeartRadio</a> – The Private Lender Podcast</li><li><a href="https://soundcloud.com/user-355136493" rel="nofollow" target="_blank">SoundCloud</a> – The Private Lender Podcast</li><li><a href="https://podcasts.apple.com/us/podcast/the-private-lender-podcast/id1329204836" rel="nofollow" target="_blank">iTunes</a> – The Private Lender Podcast</li></ul>Love the show? Subscribe, rate, review, and share!<a href="http://privatelenderpodcast.com/blog/how-to-subscribe-rate-our-podcast-5-stars-on-itunes/" rel="nofollow" target="_blank">Here’s How »</a> Join the Private Lender Podcast community today:<ul><li><a href="http://privatelenderpodcast.com/" rel="nofollow" target="_blank">PrivateLenderPodcast.com</a></li><li><a href="https://www.facebook.com/PrivateLenderPodcast/" rel="nofollow" target="_blank">Private Lender Podcast Facebook</a></li><li><a href="https://www.linkedin.com/in/keith-baker-344944155/" rel="nofollow" target="_blank">Keith Baker on LinkedIn</a></li><li><a href="https://twitter.com/PrivLendPodcast?lang=en" rel="nofollow" target="_blank">Private Lender Podcast Twitter</a></li><li><a href="https://www.youtube.com/channel/UCzctXatpCAOhF0XeV1fq2dQ?view_as=subscriber" rel="nofollow" target="_blank">Private Lender Podcast YouTube</a></li></ul>

PLP-133 The Fourth Law of Wealth

Sarah Montes

 Once you become a lender and you're looking for people to purchase your property, how do you find the buyer? How do you make it look affordable? How do you know which rules and regulations to follow? An RMLO or a residential mortgage loan originator will do just that. Learn from Sarah Montes who is the President of Texas Pride Lending on why you need an RMLO. Joining Keith Baker, Sarah explains how an RMLO guides the lender on the payment process. Listen in today on how Texas Pride helps lenders in this regard.---Guiding The Lender: Sarah Montes On RMLOsI would like to thank you for sharing your time with me as well as your consideration. If you're seeking practical tips and advice on how to increase wealth without cheap banks or unpredictable Wall Street through private mortgage lending, then you are in the right place. If you want to learn from my mistakes so that you can both avoid and profit from them, then pull up a chair and pour yourself a drink because this show is for you. This episode has been more than four years in the making. It has got a bit of a story behind it.Before we get to that, I want to encourage you to join the Private Lender Podcast Group. It is a public group, but I personally vet the applicants to ensure that it truly remains a group of just us private lenders. After years of empty threats and promises, the Private Lender Academy is finally launching in July 2021. You have the opportunity to get in when the doors open as a founding member, which means you won't be charged full price and you'll receive founder pricing on additional courses in the future. Go to PrivateLenderAcademy.com for more info. Click on that Apply Now, fill out some information, tell us a little bit about yourself, and you'll be on the list for the founding member.It is time to get down to the brass tacks of this episode. It's when my best borrower switched his business model from buying and converting into owner-financing notes using private lender money as the underlying lien. He streamlined his business and went more into a wholesaling model, which means he didn't need a private lender. He also went into a small apartment complex, which was way above what I had to offer. He did me a favor and introduced me to his friend, Landon Rothstein, who has been on the show. I initially was Landon's private lender before coming as his partner in Asset REI in 2017.At that time, Landon was a student of Mitch Stephen. He was looking to use my money as a first position and then wrap it with seller financing with an additional lien. He explained that we would use an originator to keep everything legal and above board. Since this came from Landon, I was skeptical and decided to investigate things myself. Ultimately, I came to the conclusion that Landon wasn't BS-ing me. He was indeed accurate, right, and correct. Before we put an owner-occupant inside a house with my money providing the lien, we used Texas Pride Lending, which took the end buyers' application, financial information, records, and everything that a bank or loan officer would take. They confirmed that the borrower could reasonably be expected to make the mortgage payments based on their finances, how the note was structured and the length of the note. It would be reasonable for the borrower to be expected to make these under the federal guidelines, Freddie Mac and Fannie Mae.It was during this process when I met our guest, Sarah Montes. She took care of everything and made the process extremely easy for me as a lender. If I had a question in the morning or afternoon, it was answered with the package, documents, or whatever was requested. The lender is quick and customer service-oriented for me. After I started this show, I begged her to come on the show and talk about Dodd-Frank. Why do we need RMLOs? Why do we need a loan to be originated? Our schedules never aligned. I hadn't reached out to her for over a year. I sent an email, "How are you doing? Here's a link to my recording schedule. I still want to get you on. I would love to interview you."[caption id="attachment_3145" align="aligncenter" width="600"] RMLO Lending: The main thing the RMLO does is to make sure that the buyer can afford the payment of the lender.[/caption] She booked it and replied almost immediately. That was the universe or God's way of telling me, "The time wasn't right before, but the time is now." Speaking of that, the time is now for you to pay attention. If you've ever thought about having your first mortgage wrapped or you're an investor looking to utilize seller financing as an exit strategy, which I suggest you do, then you need to read and take notes because Sarah is about to educate all of us. She takes a complicated federal law and breaks it down to where somebody like me can understand it easily. Without any further yip-yap from me, let's go ahead and get to the interview with Sarah Montes of Texas Pride Lending.---I have a very special guest for you. This is the first RMLO on the show and only so far and for a good reason, you're about to find out why. Please help me welcome Sarah Montes to the show. Sarah, thank you so much for coming on.Thanks for having me.A little background with everyone. I've gone on ad nauseam about my foray into lending and into owner finance with my partner, Landon. That's how I was introduced to Sarah. Landon was using her Texas Pride Lending for RMLO. What is RMLO?It stands for Real Estate Mortgage Loan Originator. That's what we're doing. We're originating the loan on your behalf, the private lender/owner finance. We've been doing originations for Landon for years. Thanks, Landon, for introducing us.I always tell people never to loan to an owner-occupant because it's no longer a business loan at that point. Now, you're in the consumer world. There are a lot of protections that are in place for the consumer and some obstacles to do business with them that we have to comply with. If you are going to loan to an owner-occupant, or in this case, my loan is going to be wrapped to the owner finance model like Mitch Stephen and Landon use, then it has to go through the RMLO process. People ask me, "Why do I want to go through the RMLO process? It's an extra step and cost." I like to twist a quote from Chuck D and tell them that, “The reasons are several and all of them are federal." I'm going to let you go into that part of it, why we need the RMLO, and all that fun stuff. The floor is yours.[bctt tweet="Your debt-to-income needs to be at least 50% to buy a house." username=""]If you're going to be loaning to the consumer, to the end buyer, if you're an investor, you're going to do your fix-and-flip or whatever you're going to do to a part of that property. Once it's finished, you're going to be a lender. You're going to lend money to a person to purchase this property. If you're acting as a lender, you have to follow the rules as a typical lender like the banks would because now, you're acting as a bank. That's where the rules and regulations come in. It's to make sure that you're following all the guidelines and not taking advantage of the buyer.They put some guidelines in place in 2014. The guidelines are good because they are pertaining to a small creditor. We have guidelines for the big banks and then for the little people like us that are going to do a few a year. We're going to be lending under $1 million. What we need to do is make sure the main thing on Dodd-Frank rules and regulations is to make sure that the buyer can afford that payment. That's where we come in. The RMLO will gather all of the proof of income. The lender, seller, and RMLO, we're not putting that buyer in a situation where they're not going to make that payment. It's going to be common sense underwriting. Does this person, after he pays his car payment and credit card bills, is he still going to have enough money after paying his house payment to live?It's all the whole DTI, Debt-To-Income ratio, but I want to say it’s common sense underwriting because we're not looking at their credit. We're not doing any of that like a bank. The main thing is the ability to repay that loan. That's one. The reason why also that you use an RMLO is because if you ever have to foreclose on that person, if they default and you go to court, you want to be able to say, "I checked the financials. I had a third-party RMLO check their financials to make sure that they could afford this payment." If you don't do that, they can come back to court and say, "I couldn't afford that payment and they still gave me that loan."If that happens and the judge on their side, then you would have to pay back all the interest that you ever earned on that loan and pay their attorney costs. It's going to cost you more in the long run than doing everything you need to do now. In the beginning, do it right and be compliant. The other compliance side of that is to make sure that the buyer has disclosed all the loan terms. Whatever the loan terms are going to be, for us, we send out the loan disclosures in writing. They sign off on it. If you have to go to court, they can't say, "I didn't know that was my interest rate. I didn't know this or that." Here it is. It’s all in writing in a pretty little package for you.It goes to one of our core values as a private lender. There are two ROIs. One is the return of the investment first. If you're going to loan $100, make sure you get your $100 back. The second one is a return on that investment. If I have to go to court, I would not want a judge to say, "I'm sorry. You're going to have to pay everything back." I'm a stickler for this, especially with my money go through the RMLO process. Depending on what state you're in, make sure you're under usury as well because you don't want your loan invalidated in court.The other thing that we do with your RMLO is we know all the laws, regulations, and thresholds for you to stand there. This is where we come into is to guide you to say, "These are your terms, but let me suggest this because of the thresholds that we have as small creditors." That's another great reason to use an RMLO that knows the laws for a small creditor. An RMLO is a licensed loan officer. The majority of them out there are trained in the conventional world. They're only going to know the big predator regulations. They're not going to know the small creditor regulations like Texas Pride does.You provide services in Texas. Do you go out of state as well?No, we're only licensed in Texas, but we are opening up other states in 2021.I was a little ahead of the curve. That's fine and good to hear.I want to add. Everybody asks me all the time, "Why can't you do other states? There's so much need out there." We have so much going on here in Texas that it's hard this whole time that we've been doing it. That's what's kept us back from doing it.[caption id="attachment_3146" align="aligncenter" width="600"] RMLO Lending: A qualified mortgage is that the buyer has the ability to repay the loan terms. To make sure that there are no risky features in the loan terms, that you're under the thresholds for a small creditor.[/caption] I'm in the same boat. I don't even have to leave Houston, let alone Texas, to put my money to work. Unfortunately, I run out of my own money. It's not like I have a whole lot, but I do try to put it out there. People say, "Why don't you lend here?" I'm like, "Why?"I have a lot of private investors do that come from out of state. They specifically want to loan in Texas because they know the market is so hot.I look forward to seeing what states you guys do pop up in. This isn't just, “I'm bringing somebody on.” I've used Sarah and Texas Pride myself. This is like a testimonial coming from me. We're Dodd-Frank compliant. You've provided all the documents to protect me, the lender and/or real estate investor, for doing owner finance. We're compliant there. What are some of the other benefits on the backend of having the RMLO go through the loan?At the end of our processing, underwriting, we'll give you a full underwriting package for you to keep for your files. If you ever decide that you want to sell that note, later on, you have this compliant underwriting package that says you have a qualified mortgage. It's a stamp of approval that you have a qualified mortgage. Note buyers typically will pay a lot more when you have a qualified mortgage. That's probably one of the biggest reasons too why you should if you're planning to sell that note later. Even if you say, "I'm not interested in selling my note," you never know. Later on down the road, maybe you package them up. You have ten, sell the whole portfolio, cash out, and start all over again. That's another reason to have an RMLO package in your files for each property that you do.I tend to hold my notes until the end. However, that's not to say that I might not get in a bind or need to sell 1 or 2 years' worth of a note that income stream.Maybe you have another opportunity you want to go after.I need to recapitalize to go off into something bigger and better. I'm only teaching and coaching on residential, but in my personal lending, I've gone out into multifamily and commercial as well. There's a whole other set of underwriting and everything else beyond that. To circle back, let's define a qualified mortgage.A qualified mortgage is you have made sure that the buyer is qualified through the ability to repay. That there are no risky features in the loan terms that you're under the thresholds for a small creditor. The interest rate has to be under 6.5% plus time. That number is continuously fluctuating every week. We have to check it and see where we're at. Whatever the prime rate, plus 6.5%. That's your max threshold for the interest rate. As far as the terms, you can't go over 30 years. You can't do a 45-year mortgage or something like that.There are all these little different things that we need to do to make sure that the terms are within the threshold to call it a qualified mortgage. Once we run everything, we'll give you a qualified mortgage report that says, "Check, it's passed." Another thing is points and fees. You can't charge over 3% in points and fees. It's different things like that we make sure. As we RMLO, I'm the one that's going to make sure to keep you within those thresholds and guidelines to make sure that you have a qualified mortgage.[bctt tweet="Keep your purchase price payment affordable." username=""]I'm used to hearing points and fees. If I lend out of my self-directed IRA, those fees that I pass onto the borrower would be included in that 3%?That's right. It has to be under 3%, but those are the lender fees, the fees that are going to hit the APR. It's not title fees and escrow reserves.Is it 3% points in junk fees?Yes, just lender fees. It’s anything that you're going to tax the buyer with origination fees, funding fees, and transaction fees. Anything that's going to be paid directly to the lender, that's where you're capped.Thank you for clarifying.If you're paying the title company or an attorney, it's not in that.Normally, when I've done owner-financed notes or wraps, we don't even charge points to the end buyer as long as they've got a big enough down payment or whatever threshold Landon has set. Whoever has got the most money when we do these things, he's the one with the boots on the ground doing it.Ninety-nine percent of the lenders do not charge origination fees.We're trying to help someone who's unmortgageable get into a house with a mortgage. Let's roll back here. I'm curious and know I can Google all this. I tried to Google what the prime is but I didn't get the prime rate is what I'm looking for. I was trying to search the prime rate now.I usually go to Bankrate.com. It will say conventional, FHA, VA, and all of that stuff if you just do a conventional loan. It's typically right around 3.5%. Now, the interest rates are super low. You might see 3.2%. It goes for the week. Every week, it changes. It's hard for us to charge higher interest rates. We're about at 9.25% since we don't know what the future holds and when these interest rates will start rising again because we used to be at 9.99% or 10%. We're struggling with that because of the low prime rate. What I would suggest is to do a five-year ARM, Adjustable-Rate Mortgage, so that you don't have to guess what's going to happen in five years. You can start off at whatever it is now and then you say, "In five years, I'm going to add the 6.5% to prime, whatever the prime is at that point." As interest rates start going up, so does yours as well. You're going to be with the market. You're not going to be left behind. As interest rates go up and your threshold is up to 13%, you're kicking yourself. It's another way to protect yourself when it comes to interest rates.Correct me if I'm wrong. In Texas as the consumers, you got to be under 10% or no higher than 10%?It's based on the 6.5% plus time.Back to the consumer side of things, DTI, Debt-To-Income. I like to give people quick stuff like, "Average guy or lady on the street wants to buy a house." What kind of DTI do they need?For quick, fast numbers, I would always say 50%. Say, "How much money do you make? The 1% rule for the payment is a good tool for you." I always say, "One percent of the sales price is typically your mortgage payment that includes taxes, insurance, servicing fees, and everything." If you use 1% of your sales price, then that will give you what your estimated payment would be. It's easy numbers. If you have a $100,000 house, your payment is going to be $1,000. Maybe that's a bad scenario. If you have a $200,000 house, your payment is going to be $2,000 a month. That person has to make $4,000 monthly to afford that payment. You're out in the field, walking the property with a client for fast, quick numbers that you can put in your head, say anything under 50% would qualify the buyer. I...

Once you become a lender and you're looking for people to purchase your property, how do you find the buyer? How do you make it look affordable? How do you know which rules and regulations to follow? An RMLO or a residential mortgage loan originator will do just that. Learn from <a href="https://www.linkedin.com/in/sarah-n-montes-99918478/" rel="nofollow" target="_blank">Sarah Montes</a> who is the President of <a href="https://www.texaspridelending.com/" rel="nofollow" target="_blank">Texas Pride Lending</a> on why you need an RMLO. Joining Keith Baker, Sarah explains how an RMLO guides the lender on the payment process. Listen in today on how Texas Pride helps lenders in this regard.---<h2>Guiding The Lender: Sarah Montes On RMLOs</h2>I would like to thank you for sharing your time with me as well as your consideration. If you're seeking practical tips and advice on how to increase wealth without cheap banks or unpredictable Wall Street through private mortgage lending, then you are in the right place. If you want to learn from my mistakes so that you can both avoid and profit from them, then pull up a chair and pour yourself a drink because this show is for you. This episode has been more than four years in the making. It has got a bit of a story behind it.Before we get to that, I want to encourage you to join the <a href="https://www.facebook.com/groups/360119521502949" rel="nofollow" target="_blank">Private Lender Podcast Group</a>. It is a public group, but I personally vet the applicants to ensure that it truly remains a group of just us private lenders. After years of empty threats and promises, the Private Lender Academy is finally launching in July 2021. You have the opportunity to get in when the doors open as a founding member, which means you won't be charged full price and you'll receive founder pricing on additional courses in the future. Go to <a href="http://www.PrivateLenderAcademy.com" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a> for more info. Click on that Apply Now, fill out some information, tell us a little bit about yourself, and you'll be on the list for the founding member.It is time to get down to the brass tacks of this episode. It's when my best borrower switched his business model from buying and converting into owner-financing notes using private lender money as the underlying lien. He streamlined his business and went more into a wholesaling model, which means he didn't need a private lender. He also went into a small apartment complex, which was way above what I had to offer. He did me a favor and introduced me to his friend, <a href="http://privatelenderpodcast.com/episodes/plp-094/" rel="nofollow" target="_blank">Landon Rothstein</a>, who has been on the show. I initially was Landon's private lender before coming as his partner in Asset REI in 2017.At that time, Landon was a student of <a href="https://1000houses.com/" rel="nofollow" target="_blank">Mitch Stephen</a>. He was looking to use my money as a first position and then wrap it with seller financing with an additional lien. He explained that we would use an originator to keep everything legal and above board. Since this came from Landon, I was skeptical and decided to investigate things myself. Ultimately, I came to the conclusion that Landon wasn't BS-ing me. He was indeed accurate, right, and correct. Before we put an owner-occupant inside a house with my money providing the lien, we used Texas Pride Lending, which took the end buyers' application, financial information, records, and everything that a bank or loan officer would take. They confirmed that the borrower could reasonably be expected to make the mortgage payments based on their finances, how the note was structured and the length of the note. It would be reasonable for the borrower to be expected to make these under the federal guidelines, Freddie Mac and Fannie Mae.It was during this process when I met our guest, Sarah Montes. She took care of everything and made the process extremely easy for me as a lender. If I had a question in the morning or afternoon, it was answered with the package, documents, or whatever was requested. The lender is quick and customer service-oriented for me. After I started this show, I begged her to come on the show and talk about Dodd-Frank. Why do we need RMLOs? Why do we need a loan to be originated? Our schedules never aligned. I hadn't reached out to her for over a year. I sent an email, "How are you doing? Here's a link to my recording schedule. I still want to get you on. I would love to interview you."[caption id="attachment_3145" align="aligncenter" width="600"] RMLO Lending: The main thing the RMLO does is to make sure that the buyer can afford the payment of the lender.[/caption] She booked it and replied almost immediately. That was the universe or God's way of telling me, "The time wasn't right before, but the time is now." Speaking of that, the time is now for you to pay attention. If you've ever thought about having your first mortgage wrapped or you're an investor looking to utilize seller financing as an exit strategy, which I suggest you do, then you need to read and take notes because Sarah is about to educate all of us. She takes a complicated federal law and breaks it down to where somebody like me can understand it easily. Without any further yip-yap from me, let's go ahead and get to the interview with Sarah Montes of <a href="https://www.texaspridelending.com/" rel="nofollow" target="_blank">Texas Pride Lending</a>.---I have a very special guest for you. This is the first RMLO on the show and only so far and for a good reason, you're about to find out why. Please help me welcome <a href="https://www.texaspridelending.com/" rel="nofollow" target="_blank">Sarah Montes</a> to the show. Sarah, thank you so much for coming on.Thanks for having me.A little background with everyone. I've gone on ad nauseam about my foray into lending and into owner finance with my partner, Landon. That's how I was introduced to Sarah. Landon was using her Texas Pride Lending for RMLO. What is RMLO?It stands for Real Estate Mortgage Loan Originator. That's what we're doing. We're originating the loan on your behalf, the private lender/owner finance. We've been doing originations for Landon for years. Thanks, Landon, for introducing us.I always tell people never to loan to an owner-occupant because it's no longer a business loan at that point. Now, you're in the consumer world. There are a lot of protections that are in place for the consumer and some obstacles to do business with them that we have to comply with. If you are going to loan to an owner-occupant, or in this case, my loan is going to be wrapped to the owner finance model like Mitch Stephen and Landon use, then it has to go through the RMLO process. People ask me, "Why do I want to go through the RMLO process? It's an extra step and cost." I like to twist a quote from Chuck D and tell them that, “The reasons are several and all of them are federal." I'm going to let you go into that part of it, why we need the RMLO, and all that fun stuff. The floor is yours.[bctt tweet="Your debt-to-income needs to be at least 50% to buy a house." username=""]If you're going to be loaning to the consumer, to the end buyer, if you're an investor, you're going to do your fix-and-flip or whatever you're going to do to a part of that property. Once it's finished, you're going to be a lender. You're going to lend money to a person to purchase this property. If you're acting as a lender, you have to follow the rules as a typical lender like the banks would because now, you're acting as a bank. That's where the rules and regulations come in. It's to make sure that you're following all the guidelines and not taking advantage of the buyer.They put some guidelines in place in 2014. The guidelines are good because they are pertaining to a small creditor. We have guidelines for the big banks and then for the little people like us that are going to do a few a year. We're going to be lending under $1 million. What we need to do is make sure the main thing on Dodd-Frank rules and regulations is to make sure that the buyer can afford that payment. That's where we come in. The RMLO will gather all of the proof of income. The lender, seller, and RMLO, we're not putting that buyer in a situation where they're not going to make that payment. It's going to be common sense underwriting. Does this person, after he pays his car payment and credit card bills, is he still going to have enough money after paying his house payment to live?It's all the whole DTI, Debt-To-Income ratio, but I want to say it’s common sense underwriting because we're not looking at their credit. We're not doing any of that like a bank. The main thing is the ability to repay that loan. That's one. The reason why also that you use an RMLO is because if you ever have to foreclose on that person, if they default and you go to court, you want to be able to say, "I checked the financials. I had a third-party RMLO check their financials to make sure that they could afford this payment." If you don't do that, they can come back to court and say, "I couldn't afford that payment and they still gave me that loan."If that happens and the judge on their side, then you would have to pay back all the interest that you ever earned on that loan and pay their attorney costs. It's going to cost you more in the long run than doing everything you need to do now. In the beginning, do it right and be compliant. The other compliance side of that is to make sure that the buyer has disclosed all the loan terms. Whatever the loan terms are going to be, for us, we send out the loan disclosures in writing. They sign off on it. If you have to go to court, they can't say, "I didn't know that was my interest rate. I didn't know this or that." Here it is. It’s all in writing in a pretty little package for you.It goes to one of our core values as a private lender. There are two ROIs. One is the return of the investment first. If you're going to loan $100, make sure you get your $100 back. The second one is a return on that investment. If I have to go to court, I would not want a judge to say, "I'm sorry. You're going to have to pay everything back." I'm a stickler for this, especially with my money go through the RMLO process. Depending on what state you're in, make sure you're under usury as well because you don't want your loan invalidated in court.The other thing that we do with your RMLO is we know all the laws, regulations, and thresholds for you to stand there. This is where we come into is to guide you to say, "These are your terms, but let me suggest this because of the thresholds that we have as small creditors." That's another great reason to use an RMLO that knows the laws for a small creditor. An RMLO is a licensed loan officer. The majority of them out there are trained in the conventional world. They're only going to know the big predator regulations. They're not going to know the small creditor regulations like Texas Pride does.You provide services in Texas. Do you go out of state as well?No, we're only licensed in Texas, but we are opening up other states in 2021.I was a little ahead of the curve. That's fine and good to hear.I want to add. Everybody asks me all the time, "Why can't you do other states? There's so much need out there." We have so much going on here in Texas that it's hard this whole time that we've been doing it. That's what's kept us back from doing it.[caption id="attachment_3146" align="aligncenter" width="600"] RMLO Lending: A qualified mortgage is that the buyer has the ability to repay the loan terms. To make sure that there are no risky features in the loan terms, that you're under the thresholds for a small creditor.[/caption] I'm in the same boat. I don't even have to leave Houston, let alone Texas, to put my money to work. Unfortunately, I run out of my own money. It's not like I have a whole lot, but I do try to put it out there. People say, "Why don't you lend here?" I'm like, "Why?"I have a lot of private investors do that come from out of state. They specifically want to loan in Texas because they know the market is so hot.I look forward to seeing what states you guys do pop up in. This isn't just, “I'm bringing somebody on.” I've used Sarah and Texas Pride myself. This is like a testimonial coming from me. We're Dodd-Frank compliant. You've provided all the documents to protect me, the lender and/or real estate investor, for doing owner finance. We're compliant there. What are some of the other benefits on the backend of having the RMLO go through the loan?At the end of our processing, underwriting, we'll give you a full underwriting package for you to keep for your files. If you ever decide that you want to sell that note, later on, you have this compliant underwriting package that says you have a qualified mortgage. It's a stamp of approval that you have a qualified mortgage. Note buyers typically will pay a lot more when you have a qualified mortgage. That's probably one of the biggest reasons too why you should if you're planning to sell that note later. Even if you say, "I'm not interested in selling my note," you never know. Later on down the road, maybe you package them up. You have ten, sell the whole portfolio, cash out, and start all over again. That's another reason to have an RMLO package in your files for each property that you do.I tend to hold my notes until the end. However, that's not to say that I might not get in a bind or need to sell 1 or 2 years' worth of a note that income stream.Maybe you have another opportunity you want to go after.I need to recapitalize to go off into something bigger and better. I'm only teaching and coaching on residential, but in my personal lending, I've gone out into multifamily and commercial as well. There's a whole other set of underwriting and everything else beyond that. To circle back, let's define a qualified mortgage.A qualified mortgage is you have made sure that the buyer is qualified through the ability to repay. That there are no risky features in the loan terms that you're under the thresholds for a small creditor. The interest rate has to be under 6.5% plus time. That number is continuously fluctuating every week. We have to check it and see where we're at. Whatever the prime rate, plus 6.5%. That's your max threshold for the interest rate. As far as the terms, you can't go over 30 years. You can't do a 45-year mortgage or something like that.There are all these little different things that we need to do to make sure that the terms are within the threshold to call it a qualified mortgage. Once we run everything, we'll give you a qualified mortgage report that says, "Check, it's passed." Another thing is points and fees. You can't charge over 3% in points and fees. It's different things like that we make sure. As we RMLO, I'm the one that's going to make sure to keep you within those thresholds and guidelines to make sure that you have a qualified mortgage.[bctt tweet="Keep your purchase price payment affordable." username=""]I'm used to hearing points and fees. If I lend out of my self-directed IRA, those fees that I pass onto the borrower would be included in that 3%?That's right. It has to be under 3%, but those are the lender fees, the fees that are going to hit the APR. It's not title fees and escrow reserves.Is it 3% points in junk fees?Yes, just lender fees. It’s anything that you're going to tax the buyer with origination fees, funding fees, and transaction fees. Anything that's going to be paid directly to the lender, that's where you're capped.Thank you for clarifying.If you're paying the title company or an attorney, it's not in that.Normally, when I've done owner-financed notes or wraps, we don't even charge points to the end buyer as long as they've got a big enough down payment or whatever threshold Landon has set. Whoever has got the most money when we do these things, he's the one with the boots on the ground doing it.Ninety-nine percent of the lenders do not charge origination fees.We're trying to help someone who's unmortgageable get into a house with a mortgage. Let's roll back here. I'm curious and know I can Google all this. I tried to Google what the prime is but I didn't get the prime rate is what I'm looking for. I was trying to search the prime rate now.I usually go to <a href="https://www.bankrate.com/" rel="nofollow" target="_blank">Bankrate.com</a>. It will say conventional, FHA, VA, and all of that stuff if you just do a conventional loan. It's typically right around 3.5%. Now, the interest rates are super low. You might see 3.2%. It goes for the week. Every week, it changes. It's hard for us to charge higher interest rates. We're about at 9.25% since we don't know what the future holds and when these interest rates will start rising again because we used to be at 9.99% or 10%. We're struggling with that because of the low prime rate. What I would suggest is to do a five-year ARM, Adjustable-Rate Mortgage, so that you don't have to guess what's going to happen in five years. You can start off at whatever it is now and then you say, "In five years, I'm going to add the 6.5% to prime, whatever the prime is at that point." As interest rates start going up, so does yours as well. You're going to be with the market. You're not going to be left behind. As interest rates go up and your threshold is up to 13%, you're kicking yourself. It's another way to protect yourself when it comes to interest rates.Correct me if I'm wrong. In Texas as the consumers, you got to be under 10% or no higher than 10%?It's based on the 6.5% plus time.Back to the consumer side of things, DTI, Debt-To-Income. I like to give people quick stuff like, "Average guy or lady on the street wants to buy a house." What kind of DTI do they need?For quick, fast numbers, I would always say 50%. Say, "How much money do you make? The 1% rule for the payment is a good tool for you." I always say, "One percent of the sales price is typically your mortgage payment that includes taxes, insurance, servicing fees, and everything." If you use 1% of your sales price, then that will give you what your estimated payment would be. It's easy numbers. If you have a $100,000 house, your payment is going to be $1,000. Maybe that's a bad scenario. If you have a $200,000 house, your payment is going to be $2,000 a month. That person has to make $4,000 monthly to afford that payment. You're out in the field, walking the property with a client for fast, quick numbers that you can put in your head, say anything under 50% would qualify the buyer. I...

PLP-132 Guiding The Lender: Sarah Montes On RMLOs

Hello Private Lender nation and welcome to episode 131 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time and your ears with me today. Love the show? Subscribe, rate, review, and share!Here’s How »If you’re seeking practical tips and advice on how to increase wealth without banks or wallstreet through private mortgage lending, then you are in the right place. But if you want to learn from my mistakes so you can both avoid and profit from them - well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you!In today’s episode, we’ll go over 3 ways you can start lending with less than $50,000. But before we get to the heart of the matter, first I need to do a little housekeeping. 1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast.Private Lender Podcast Facebook Group 2 – And most important of all, the Private Lender Academy is launching in just a few weeks and if you would like to get on the list for pre-launch bonuses like discount codes, then head over to PrivateLenderAcademy.com and click on “Apply Now”: provide some background on your investing experience and goalsApply – Private Lender AcademyThe Private Lender Academy is slated to launch in mid-July, which is still after July 4th weekend, so I’m not a complete liar. Look, it’s a lot more than I thought it would be, but I will bring it across the finish line: come hell or high water.OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: 3 ways to lend with less than $30,000. 1 – REIT - Real Estate Investment Trust: A company that owns, operates, or finances income-producing propertiesPay a minimum of 90% of taxable income in the form of shareholder dividends each year·        Modeled after mutual funds – most publicly traded on public exchanges – provides liquidity·        Do not provide much capital appreciation·        Usually target a specific asset class/sectorMulti-FamilyCommercial Mobile Phone TowersHotelsData CentersRetailTimberlandWarehouseMost are equity REITSSome are Mortgage REITS which lend to operators or purchase mortgage-backed securities 2 – Real Estate FundThink - hard money loans on Single Family Residences: o  Fix and Flipo  Buy and Holdo  Commercial/Multi-Family·        You provide capital at an agreed interest rate·        ~ 1 year minimum·        Quarterly interest payments·        ~ 90 notice to receive return of principle Episode 43 with Tom Berry from Investor Loan Source.  Great way to see due diligence (loan packages) while someone else does all the work 3 – Lend to Owner Finance investors           Provide the purchase capital in the first position            Your lien is “wrapped” by a second mortgage from your borrower to the end- buyer           3 – 5 years           8% Mitch Stephen perfected this model of investing.  So, let’s recap these first 3 strategies for lending with less than $50,000: 1 – REITs2 – Real Estate Funds3 – Owner Finance OK. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice. It doesn’t take that long and it’s a small price for the value I try to provide.  That’s gonna do it for Episode 131 1 – Join the Private Lender Podcast Facebook Group2 - Remember, the http://privatelenderacademy.com/ will launch in July 2021. Head over to http://privatelenderacademy.com/ for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now”So, as I sign off I’d like to say in additional to self-awareness and mindfulness, I wish you safe and prosperous Private Lending.I’ll catch you on the next episode.-kLove the show? Subscribe, rate, review, and share!Here’s How »Join the Private Lender Podcast community today:PrivateLenderPodcast.comPrivate Lender Podcast FacebookKeith Baker on LinkedInPrivate Lender Podcast TwitterPrivate Lender Podcast YouTube

Hello Private Lender nation and welcome to episode 131 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time and your ears with me today. Love the show? Subscribe, rate, review, and share!<ul><li><a href="http://privatelenderpodcast.com/blog/how-to-subscribe-rate-our-podcast-5-stars-on-itunes/" rel="nofollow" target="_blank">Here’s How »</a></li></ul>If you’re seeking practical tips and advice on how to increase wealth without banks or wallstreet through private mortgage lending, then you are in the right place. But if you want to learn from my mistakes so you can both avoid and profit from them - well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you!In today’s episode, we’ll go over 3 ways you can start lending with less than $50,000. But before we get to the heart of the matter, first I need to do a little housekeeping. 1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast.<a href="https://www.facebook.com/groups/674936429994760" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a> 2 – And most important of all, the Private Lender Academy is launching in just a few weeks and if you would like to get on the list for pre-launch bonuses like discount codes, then head over to <a href="http://PrivateLenderAcademy.com" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a> and click on “Apply Now”: provide some background on your investing experience and goals<a href="http://privatelenderacademy.com/apply/" rel="nofollow" target="_blank">Apply – Private Lender Academy</a>The Private Lender Academy is slated to launch in mid-July, which is still after July 4th weekend, so I’m not a complete liar. Look, it’s a lot more than I thought it would be, but I will bring it across the finish line: come hell or high water.OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: 3 ways to lend with less than $30,000. 1 – REIT - Real Estate Investment Trust: A company that owns, operates, or finances income-producing propertiesPay a minimum of 90% of taxable income in the form of shareholder dividends each year·        Modeled after mutual funds – most publicly traded on public exchanges – provides liquidity·        Do not provide much capital appreciation·        Usually target a specific asset class/sector<ul><li>Multi-Family</li><li>Commercial </li><li>Mobile Phone Towers</li><li>Hotels</li><li>Data Centers</li><li>Retail</li><li>Timberland</li><li>Warehouse</li></ul>Most are equity REITSSome are Mortgage REITS which lend to operators or purchase mortgage-backed securities 2 – Real Estate FundThink - hard money loans on Single Family Residences: o  Fix and Flipo  Buy and Holdo  Commercial/Multi-Family·        You provide capital at an agreed interest rate·        ~ 1 year minimum·        Quarterly interest payments·        ~ 90 notice to receive return of principle <a href="http://privatelenderpodcast.com/episodes/plp-043/" rel="nofollow" target="_blank">Episode 43</a> with <a href="http://privatelenderpodcast.com/episodes/plp-043/" rel="nofollow" target="_blank">Tom Berry</a> from Investor Loan Source. Great way to see due diligence (loan packages) while someone else does all the work 3 – Lend to Owner Finance investors           Provide the purchase capital in the first position            Your lien is “wrapped” by a second mortgage from your borrower to the end- buyer           3 – 5 years           8% Mitch Stephen perfected this model of investing. So, let’s recap these first 3 strategies for lending with less than $50,000: 1 – REITs2 – Real Estate Funds3 – Owner Finance OK. Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice. It doesn’t take that long and it’s a small price for the value I try to provide.  That’s gonna do it for Episode 131 1 – Join the <a href="https://www.facebook.com/groups/674936429994760" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a>2 - Remember, the <a href="http://privatelenderacademy.com/" rel="nofollow" target="_blank">http://privatelenderacademy.com/</a> will launch in July 2021. Head over to <a href="http://privatelenderacademy.com/" rel="nofollow" target="_blank">http://privatelenderacademy.com/</a> for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now”So, as I sign off I’d like to say in additional to self-awareness and mindfulness, I wish you safe and prosperous Private Lending.I’ll catch you on the next episode.-k Love the show? Subscribe, rate, review, and share!<ul><li><a href="http://privatelenderpodcast.com/blog/how-to-subscribe-rate-our-podcast-5-stars-on-itunes/" rel="nofollow" target="_blank">Here’s How »</a></li></ul>Join the Private Lender Podcast community today:<ul><li><a href="http://privatelenderpodcast.com/" rel="nofollow" target="_blank">PrivateLenderPodcast.com</a></li><li><a href="https://www.facebook.com/PrivateLenderPodcast/" rel="nofollow" target="_blank">Private Lender Podcast Facebook</a></li><li><a href="https://www.linkedin.com/in/keith-baker-344944155/" rel="nofollow" target="_blank">Keith Baker on LinkedIn</a></li><li><a href="https://twitter.com/PrivLendPodcast?lang=en" rel="nofollow" target="_blank">Private Lender Podcast Twitter</a></li><li><a href="https://www.youtube.com/channel/UCzctXatpCAOhF0XeV1fq2dQ?view_as=subscriber" rel="nofollow" target="_blank">Private Lender Podcast YouTube</a></li></ul>

PLP-131 Three Strategies for Private Lending with Less than $50,000

The Fourth Cure for A Lean Account BalanceHello Private Lender nation and welcome to episode 130 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today. If you’re looking for practical tips and advice on how to keep your money safe as a Private Lender, then you are in the right place. But if you want to learn from my mistakes so you can avoid them, well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you!In today’s episode, we will continue with our monthly lesson from the book the Richest Man in Babylon. Today’s lesson is the 4th cure for a lean account, but before we get to the heart of the matter, first I need to do a little housekeeping. 1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast.Private Lender Podcast Facebook Group 2 – And most important of all, the Private Lender Academy is launching in just a few weeks and if you would like to get on the list for pre-launch bonuses like discount codes, then head over to PrivateLenderAcademy.com and click on “Apply Now”: provide some background on your investing experience and goalsApply – Private Lender AcademyThe Private Lender Academy is slated to launch after July 4th weekend!OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: the 4th cure for a lean account.And like so many lessons in life that we should heed, the principle is quite simple, but we humans seem to have trouble with the execution. The 4th cure for a lean purse points precisely to the first Core Value of a Private Lender: ROI1 - Return of Investment.Let’s get to it, and listen to what Arkad tells his students:“Misfortune loves a shining mark. Gold in a man’s purse must be guarded with firmness, else it be lost. Thus it is wise that we must first secure small amounts and learn to protect them before the Gods entrust us with larger ones.Every owner of gold is tempted by opportunities whereby it would seem that he could make large sums by its investment in most plausible projects. Often friends and relatives are eagerly entering such investment and urge him to follow.The first sound principle of investment is security for your principle (Return OF Investment). Is it wise to be intrigued by larger earnings when your principle could be lost? I say not. The penalty of risk is probable loss. Study carefully, before parting your money, each assurance that it may be safely reclaimed. Do not be misled by your own romantic desires to make wealth rapidly.Before you loan it to any man assure yourself of his ability to repay and his reputation for doing so, that you may not unwittingly be making him a present of your hard-earned money.Before you entrust it as an investment in any field acquaint yourself with the dangers which may threaten it.My own first investment was a tragedy to me at the time. The guarded savings of one year did I entrust to a brickmaster who was traveling over the far seas and in the city of Tyre agreed to buy for me the rare jewels of the Phoenicians. These we would sell upon his return and divide the profits. The Phoenicians were scoundrels and sold him bits of glass. My money was lost. Today, my training would show me at once the mistake I made of entrusting a brickmaster to buy jewels.Therefore, I advise you from the wisdom of my experiences: do to be too confident in your own wisdom by entrusting your wealth to the possible pitfalls of investments. It is by far better to consult the wisdom of those experienced in handling money for profit. Such advice is freely given for the asking and may readily possess a value equal in gold to the amount you consider investing. In truth, such is its actual value if it saves you from loss.This, then, is the fourth cure for a lean purse, and of great importance if it prevents your purse from being emptied once it has become filled."Guard your wealth against loss by investing only where your principal is safe, where it may be reclaimed if desirable and where you will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of money. Let their wisdom protect your wealth from unsafe investments.”Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice. It doesn’t take that long and it’s a small price for the value I try to provide.  That’s gonna do it for Episode 128 and just a few final thoughts:1 – Join the Private Lender Podcast Facebook Group2 - Remember, the Private Lender Academy http://privatelenderacademy.com/ will launch in July 2021. Head over to http://privatelenderacademy.com/ for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now”So, as I sign off I’d like to say that in addition to self-awareness and mindfulness - I wish you safe and prosperous Private Lending.I’ll catch you on the next episode.-kImportant Links:Private Lender Podcast Group – FacebookPrivateLenderAcademy.comPrivateLenderAcademy.com/applyGoogle Podcasts – The Private Lender PodcastSpotify – The Private Lender PodcastiHeartRadio – The Private Lender PodcastiTunes – The Private Lender Podcast

The Fourth Cure for A Lean Account BalanceHello Private Lender nation and welcome to episode 130 of the Private Lender Podcast, I’m your host, Keith Baker and I’d like to thank you for sharing your time with me today. If you’re looking for practical tips and advice on how to keep your money safe as a Private Lender, then you are in the right place. But if you want to learn from my mistakes so you can avoid them, well then pull up a chair and pour yourself a drink my friend, because this podcast is just for you!In today’s episode, we will continue with our monthly lesson from the book the Richest Man in Babylon. Today’s lesson is the 4th cure for a lean account, but before we get to the heart of the matter, first I need to do a little housekeeping. 1 - Have you joined the Private Lender Podcast Facebook group? Well why not? Head over to the show notes for the link or simply search Facebook groups for the Private Lender Podcast.<a href="https://www.facebook.com/groups/674936429994760" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a> 2 – And most important of all, the Private Lender Academy is launching in just a few weeks and if you would like to get on the list for pre-launch bonuses like discount codes, then head over to <a href="http://PrivateLenderAcademy.com" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a> and click on “Apply Now”: provide some background on your investing experience and goals<a href="http://privatelenderacademy.com/apply/" rel="nofollow" target="_blank">Apply – Private Lender Academy</a>The Private Lender Academy is slated to launch after July 4th weekend!OK, the housekeeping is finished and now it’s time to get down to the brass tacks of today’s episode: the 4th cure for a lean account.And like so many lessons in life that we should heed, the principle is quite simple, but we humans seem to have trouble with the execution. The 4th cure for a lean purse points precisely to the first Core Value of a Private Lender: ROI1 - Return of Investment.Let’s get to it, and listen to what Arkad tells his students:“Misfortune loves a shining mark. Gold in a man’s purse must be guarded with firmness, else it be lost. Thus it is wise that we must first secure small amounts and learn to protect them before the Gods entrust us with larger ones.Every owner of gold is tempted by opportunities whereby it would seem that he could make large sums by its investment in most plausible projects. Often friends and relatives are eagerly entering such investment and urge him to follow.The first sound principle of investment is security for your principle (Return OF Investment). Is it wise to be intrigued by larger earnings when your principle could be lost? I say not. The penalty of risk is probable loss. Study carefully, before parting your money, each assurance that it may be safely reclaimed. Do not be misled by your own romantic desires to make wealth rapidly.Before you loan it to any man assure yourself of his ability to repay and his reputation for doing so, that you may not unwittingly be making him a present of your hard-earned money.Before you entrust it as an investment in any field acquaint yourself with the dangers which may threaten it.My own first investment was a tragedy to me at the time. The guarded savings of one year did I entrust to a brickmaster who was traveling over the far seas and in the city of Tyre agreed to buy for me the rare jewels of the Phoenicians. These we would sell upon his return and divide the profits. The Phoenicians were scoundrels and sold him bits of glass. My money was lost. Today, my training would show me at once the mistake I made of entrusting a brickmaster to buy jewels.Therefore, I advise you from the wisdom of my experiences: do to be too confident in your own wisdom by entrusting your wealth to the possible pitfalls of investments. It is by far better to consult the wisdom of those experienced in handling money for profit. Such advice is freely given for the asking and may readily possess a value equal in gold to the amount you consider investing. In truth, such is its actual value if it saves you from loss.This, then, is the fourth cure for a lean purse, and of great importance if it prevents your purse from being emptied once it has become filled."Guard your wealth against loss by investing only where your principal is safe, where it may be reclaimed if desirable and where you will not fail to collect a fair rental. Consult with wise men. Secure the advice of those experienced in the profitable handling of money. Let their wisdom protect your wealth from unsafe investments.”Here’s the deal, I don’t charge money for this show, but there is a cost and I would be extremely grateful if you would help drive awareness to the show, to get the word out by leaving me an honest rating and review over at iTunes, Google Podcast or whatever platform you are using to hear my voice. It doesn’t take that long and it’s a small price for the value I try to provide.  That’s gonna do it for Episode 128 and just a few final thoughts:1 – Join the <a href="https://www.facebook.com/groups/674936429994760" rel="nofollow" target="_blank">Private Lender Podcast Facebook Group</a>2 - Remember, the Private Lender Academy <a href="http://privatelenderacademy.com/" rel="nofollow" target="_blank">http://privatelenderacademy.com/</a> will launch in July 2021. Head over to <a href="http://privatelenderacademy.com/" rel="nofollow" target="_blank">http://privatelenderacademy.com/</a> for more information. And to be eligible for discounts and other pre-launch goodies like group coaching calls, then click on “Apply Now”So, as I sign off I’d like to say that in addition to self-awareness and mindfulness - I wish you safe and prosperous Private Lending.I’ll catch you on the next episode.-k<h3>Important Links:</h3><ul><li><a href="https://www.facebook.com/groups/360119521502949" rel="nofollow" target="_blank">Private Lender Podcast Group</a> – Facebook</li><li><a href="http://www.privatelenderacademy.com/" rel="nofollow" target="_blank">PrivateLenderAcademy.com</a></li><li><a href="http://www.privatelenderacademy.com/apply" rel="nofollow" target="_blank">PrivateLenderAcademy.com/apply</a></li><li><a href="https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5jYXB0aXZhdGUuZm0vdGhlcHJpdmF0ZWxlbmRlcnBvZGNhc3Qv" rel="nofollow" target="_blank">Google Podcasts</a> – The Private Lender Podcast</li><li><a href="https://open.spotify.com/show/4nhQSNa6ObSdAJ0z75JGMu" rel="nofollow" target="_blank">Spotify</a> – The Private Lender Podcast</li><li><a href="https://www.iheart.com/podcast/256-the-private-lender-pod-31152347/" rel="nofollow" target="_blank">iHeartRadio</a> – The Private Lender Podcast</li><li><a href="https://podcasts.apple.com/us/podcast/the-private-lender-podcast/id1329204836" rel="nofollow" target="_blank">iTunes</a> – The Private Lender Podcast</li></ul>

PLP-130 The Fourth Cure For A Small Account Balance

The show that shares practical advice and know-how for new and seasoned lenders: from private mortgages on single family houses to joint ventures on commercial projects, and beyond.  Discover details about investment vehicles that you won’t find at your local bank or online broker.   Listen and learn from private lenders and real estate investors, as well as from professionals and entrepreneurs as they share the details, strategies, and the insight that allows for successful and prosperous lending.  This podcast is geared towards those who command and demand more from their investments.  Now, get ready to increase your ROI !!!

Great show. Curious to know what podcasts you listen to

Question

Plenty of content and points of views from all the different investors interviewed!!!!!!

Great content

The Private Lender Podcast

Steve Driscoll

Some of us originate from somewhere away from real estate investing. A person who has been through the same journey is Steve Driscoll of ECONO HOMES, LLC who talks about his experiences and all things private lending. He shares his background on how he went from auto finance to real estate investing, walking us through cars and houses. Steve gives some great insights on how he runs things, from buying and liquidating credit card paper to financing. Touching as well on subjects like LTV and RMLO, he brings information that shows the inner ropes of private lending. — Listen to the podcast here: All Things Private Lending with Steve Driscoll I’m proud and honored to have Steve Driscoll with us. I met Steve down in Cancun on the Mitch Stephen Real Estate Mastermind. If there’s anything you want to know about that trip, Steve could tell you all the dirt on me and everything. Steve, thanks for coming on. It’s good to see you. Thanks for asking me to come on board. There’s no formal structure to this interview. I wanted Steve to come on. We got along good down in Cancun. I’ve seen him in Texas since then at another Mitch Stephen event and I wanted to continue the roll. You were on very quickly on the episode I did regarding the Cancun mastermind, but I want to delve a little deeper into your past and what you do. Correct me if I’m wrong but you are a New York gangster. You’re in the mob. I was out in the San Antonio and Houston. I didn’t spend much time in Houston. It’s a nice part of the world there but it’s a lot different than what New York is and a lot different than the Northeast. You don’t appreciate the country until you start traveling around it. I had a great time. I met some good people. You did it right. You went down there in October, which is a good time to go to Texas; May through September. Besides that former criminal activity that you never did, I know you have a background in finance. Give us your background in how you went and got into auto finance I believe now you’re doing in real estate. Walk us through how you went from cars to houses. If you're an entrepreneur, you better roll with the punches.Click To Tweet The cars started way back. I took a hobby and decided to make a living out of it. I love automobiles. Who doesn’t love cars? Who doesn’t like cars? I was a kid and I was selling cars out of my driveway. As time went on, I opened up car dealerships and it was around 1985. In 1985, when our friends from Korea started bringing cars to the US under the name Hyundai, we also got another beautiful automobile here called the Pyeonghwa. Detroit started to feel the pinch because they were taking sales away. They started dropping their interest rates and as they dropped the interest rates down, they were buying anybody’s loans that they could fog a mirror speaking. We went from doing a great business to being almost shut down overnight. What do you do? You had to reinvent. If you’re an entrepreneur or a true person, you better roll with the punches. You’ve got to change with the market and you’ve got to make yourself reinvent it. We went ahead. I did a little research and I said, “It’s the same thing in the real estate market if you’re doing financing. Look at the biggest side of the market. The biggest side of the market is the people that can’t get financed and it’s over 80%.” At the time back in the ‘80s New York metro area, over 80% of the people who were shopping to buy a car didn’t qualify. I said, “I want to go service that into the market.” I made some alliances with some finance companies and that these guys were absolute crooks. They were the gangsters. I said, “If these guys can do this, I can do this legitimately.” I went and I became a licensed finance company. In New York State, that’s not an easy thing to do. Nothing’s easy to do in New York, but I did it for a long time. You use your own money for a while and after a while, you run out of money. You are bringing in private investors. There are banks and finance companies that are unique, that are just boutique lenders for that end of the market. After a while, we were collecting $500,000 a month just in interest. We were doing well. I had lines of credit with asset-based lenders. I had one line for $65 million and a backup line for $15 million. That’s $80 million and thank God we never used the backup line. We came close at one time using the whole line, but we did well for a long period of time. This podcast is about private lending and if I go back and I think, “You’ve got to be able to put a price on an asset. You’ve got to be able to look and see document wise no matter what the asset is.” I used to loan money. I had loaned money on some of the craziest stuff. I’ve come out with that book. You’ve got a copy of it right there, Real Estate Rock Stars. I contributed to the first chapter inside the book. I didn’t write the whole book. I was asked to come on board with it and I talk all about my business model and I talk about how to protect investors, what you should do, what the steps are in general. I’m a pretty conservative borrower. I don’t like borrowing money, but if you can’t do business now, sooner or later you’re going to run out of cash. This is a quick story. I’d buy almost any damn thing if I could liquidate it. I learned from these two old timers from New York City. They were both old retired attorneys and they’d buy anything. They could make chicken soup out of a chicken crap. They called me up one day and I was buying a credit card paper and all kinds of notes and stuff from them and just liquidating it out in big volumes through my company. They called me up one day and say, “Where are you?” I said, “I’m in Long Island.” These guys said, “Move to Arizona. Get in your car. You’ve got to go to Connecticut for us. You’re in this deal.” I said, “What’s the deal?” He says, “We’re buying a submarine.” This was the craziest deal I ever did. He said, “You’re in.” I said, “What are you talking about?” He said, “You should just get in the car. Call me when you’re on the way.” Real Estate Rock Stars: Real Estate Leaders Rocking The Real Estate Industry Today I had a couple of loose ends that I need to take care of and I hop in the car. I’m driving up the New England Thruway and I’m heading up to Connecticut. I get them back on the phone and he says, “These guys will liquidate us. We’ll loan this guy money against this submarine.” I go, “Yes.” He goes, “He’s not going to make the first payment on it.” I was like, “How do you know that?” He was like, “I’m telling you, he’s not going to make the first payment.” I go, “What’s the deal?” “Instead of us just buying it, we’ll get a loan of money against that. You’re in for $150,000. We’ve got the rest of it handled.” What does that mean? We already got this thing sold. I didn’t say anything after that. He said, “Go up there. Pull up to the place. See if it’s in the water. That’s great. It means it floats. If it starts up and it runs, that’s even better. If it moves, that’s even better. It’s a celebration.” I wind up and I was up over there. There is this big black turd in the ground. It was a World War II whiskey sub. The guy had bought it up in Nova Scotia and it was decommissioned. Then he drove it down to Connecticut and he wanted to borrow some money against it. I show up there and the guy said, “Are you here to inspect it?” I go, “I guess so.” “Come on our board.” I said, “I’ll stay right here.” He started it up and the big wheels turned. All was well. I left and I was on the way back and I called him. I said, “Is this thing all right? It’s in the water.” He said, “It’s great.” About five six weeks later I called because I haven’t gotten the check, “What’s going on with this thing?” “It’s all being worked out.” It was about eight weeks. He said, “The guy defaulted so we foreclosed. We’re dicing it up. We’ll ship it to San Diego.” I said, “What does that mean?” “We’re cutting it up,” because you can’t put the thing on one trailer. They’re cutting it up in pieces and they’re selling it to a salvage company in California. They already had money from the guy. These guys were incredible. These guys are real hustlers. That was a lesson I learned early about knowing what a liquidation value was worth. If you’re going to buy an asset and you’re going to loan somebody money against something, you want to know what the quick liquidation value is if the crap hits the fan. That’s important. Without knowing the value, you’re gambling. I don’t mean to take over your shoulder. I have no problem doing it. It’s a great story. You went to Connecticut to look at a submarine. I can see a mobile home or maybe a hot rod car but a submarine. We made six figures on that one. I was happy on that. They sold it to us. They salvaged it supposedly. It was in pieces on trucks by the time I called the guy. About six, eight weeks into it, they had already cut the thing up and they were transporting it. They had a piece left in Connecticut. I’d like to continue down this tangent a little bit because you mentioned that you were buying and liquidating credit card paper. Run us through how that worked. Without knowing the value of what you’re buying is gambling.Click To Tweet Back in the day, I don’t know how it is nowadays because I don’t do that, but you could buy volumes, lots of defaulted credit card paper. This fellow was taking over companies that were going out of business. Let’s say a guy at a jewelry store and he had four or five different jewelry stores. When I say credit card paper, it was more like loan paper, this particular transaction. They originated millions of dollars and it was all just paper. Meaning, it wasn’t cash. I promised the pays. I don’t think the guys cost of goods was even 5% of what was writing the stuff for but it was crazy. It was marked that way up. When he was liquidating these buildings, he got everything. He was going to make it play and he says, “I’m going to buy everything. I’m going to buy all the assets. We’ve got the buildings, the furniture,” he got everything in it which included the account paper. When he put a liquidation value on this and that, I want to put it all on the paper. Some of the transactions were big. He also bought in a different transaction, he wants them taken over. It was a collection agency and he got a lot of accounts that they held in-house that they had purchased and he wants them shoveled out over to me. There was a lot of HSBC. I believe it was HSBC Bank many years ago. We started running this through our systems and most of the stuff was fraud and the people never existed. When they send you a credit card and all you’ve got to do is sign, they wouldn’t go by people’s addresses. Generally speaking, what the income is for the area. They’ll give anybody a $1,000 line. That’s where all this crap was, most of the stuff was a collective. We wasted a lot of time on that. I bought judgments in the past. You can make money with judgments if you know what you are doing. When anything you’re going to look at is going to be tied to a piece of real estate, you’re in the driver’s seat if you know what you are doing. You mentioned your business model in the book, Real Estate Rockstars. You do a little bit of landlording, some lease optioning and seller financing, but what does your business look like now? What I do now is I bring in private lenders, buy houses and finance them for the long haul. I like passive mailbox money. I’m not in getting big checks right away. I want to retire one day. I’m getting old. I love mailbox money. One thing I found when I was in the auto finance business was good times and bad times, no matter what. You might not be selling anything or you might not be financing anything, but money still comes in the door. That’s what I love. When you’re in a business, when you can manufacture a business like this, when you’re in a business where the money makes the money, now you’re in a business. In the home finance business or owner finance business, you’re limiting your income to how many units you can go out there and sell and finance. The long-term, since what you’re doing is facilitating financing, you’re selling money. You’re not selling a piece of real estate. I’m selling money. When you sell money and I’m writing 30 contracts on it, that’s forever money. I bring investors in for five and ten years and I just do interest only with them. I was at a REIA meeting. He’s all happy about this renovation that he did on this house, this rehab. Many people watch this stuff on TV and they think they’re going to make so much money. He’s talking about this and when he gets all finished, with all the money that he invested in this property, he takes out a calculator and goes, “What’s the net number before taxes?” It was less than 3.5%. This guy killed himself that put this thing together. I didn’t crack what it was with the guy or anything like that, he was a lot bigger than me anyway. I said, “The thing to do is just sit back and watch it.” I don’t know when this is going to hit the airwaves, but the stock market dropped 650 points. This is no ordinary mom and dad stock market. This is not the Wall Street that your dad invested in. The individual people or even if your company’s investing, we’re not big enough to be in the know as to what’s happening. They say this insider information is all illegal. It’s all over Wall Street and that’s how these guys are making their plays. We’re not big enough to being inside that club as they say to know how that’s going to work. Where does that leave us? If you’re investing on Wall Street, you’re gambling. It’s the biggest casino in the world. Private Lending: If you’re investing on Wall Street, you’re gambling. It’s the biggest casino in the world.   You have absolutely no way of knowing what this stock is or whatever you invest in is going to be worth anything. After the meeting, I was giving away my book. A bunch of them came over and said, “What’s your strategy? How do you figure this and that? Why is what you do so much better than what happens on Wall Street? I’ve been investing in Wall Street for years.” I said, “How much money do you make?” They go, “Enough for a part-time job.” I said, “The big difference is the hedge.” “What’s a hedge?” I go, “If you buy a piece of stock, you buy one stock for $100 on Wall Street, you’re paying 100% of the value for that stock.” It costs you $100. A week from now for some reason, the stock loses 10% of its market value. Now it’s down to $90 a share. If you decide you want to get out, there are fees for getting out of it but let’s just say it’s $90 now. What do you do? Does the street tell you to reinvest it to just sit back and wait? Maybe it will go up. How many times are you going to sit there and stare at the business news and hopefully there is more good news that will help you maybe push this back up? I can’t do that and I can’t be responsible like that for an investor. I can’t tell somebody that that’s legitimate investing. My dad was a banker all his life. He invested some money in Wall Street and he never made a lot of money on it. I was raised saying, “Don’t gamble. There are no sure things in life.” Let’s change the numbers. Instead of $100, it’s $100,000. It’s a $100,000 house and you’re going to give me $60,000 on a first mortgage. That’s $0.60 on the dollar. That $40,000 is the hedge. It’s the spread. In order for your value to start dropping, in order for that mortgage, that value that you have, that note to take a big hit, that number from $100,000 has got to drop way down. That’s your hedge. That’s what banks look at. This as a bank model. If you don’t think so, ask yourself one question. Why are there banks on every corner throughout the United States? Why is it that you can put money into their bank and they’re only giving you a point two or three quarters of a point, 1% or maybe a point and a half. They turn around and put it out for five or six. They’re making money on your money arbitrage. That’s what they call it....

Some of us originate from somewhere away from real estate investing. A person who has been through the same journey is Steve Driscoll of ECONO HOMES, LLC who talks about his experiences and all things private lending. He shares his background on how he went from auto finance to real estate investing, walking us through cars and houses. Steve gives some great insights on how he runs things, from buying and liquidating credit card paper to financing. Touching as well on subjects like LTV and RMLO, he brings information that shows the inner ropes of private lending. — <h3>Listen to the podcast here:</h3> <h2>All Things Private Lending with Steve Driscoll</h2> I’m proud and honored to have <a href="https://www.econohomesllc.com/" rel="noopener external noreferrer nofollow" target="_blank">Steve Driscoll</a> with us. I met Steve down in Cancun on the Mitch Stephen Real Estate Mastermind. If there’s anything you want to know about that trip, Steve could tell you all the dirt on me and everything. Steve, thanks for coming on. It’s good to see you. Thanks for asking me to come on board. There’s no formal structure to this interview. I wanted Steve to come on. We got along good down in Cancun. I’ve seen him in Texas since then at another Mitch Stephen event and I wanted to continue the roll. You were on very quickly on the episode I did regarding the Cancun mastermind, but I want to delve a little deeper into your past and what you do. Correct me if I’m wrong but you are a New York gangster. You’re in the mob. I was out in the San Antonio and Houston. I didn’t spend much time in Houston. It’s a nice part of the world there but it’s a lot different than what New York is and a lot different than the Northeast. You don’t appreciate the country until you start traveling around it. I had a great time. I met some good people. You did it right. You went down there in October, which is a good time to go to Texas; May through September. Besides that former criminal activity that you never did, I know you have a background in finance. Give us your background in how you went and got into auto finance I believe now you’re doing in real estate. Walk us through how you went from cars to houses. If you're an entrepreneur, you better roll with the punches. <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-049/&amp;text=If%20you%27re%20an%20entrepreneur%2C%20you%20better%20roll%20with%20the%20punches.&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> The cars started way back. I took a hobby and decided to make a living out of it. I love automobiles. Who doesn’t love cars? Who doesn’t like cars? I was a kid and I was selling cars out of my driveway. As time went on, I opened up car dealerships and it was around 1985. In 1985, when our friends from Korea started bringing cars to the US under the name Hyundai, we also got another beautiful automobile here called the Pyeonghwa. Detroit started to feel the pinch because they were taking sales away. They started dropping their interest rates and as they dropped the interest rates down, they were buying anybody’s loans that they could fog a mirror speaking. We went from doing a great business to being almost shut down overnight. What do you do? You had to reinvent. If you’re an entrepreneur or a true person, you better roll with the punches. You’ve got to change with the market and you’ve got to make yourself reinvent it. We went ahead. I did a little research and I said, “It’s the same thing in the real estate market if you’re doing financing. Look at the biggest side of the market. The biggest side of the market is the people that can’t get financed and it’s over 80%.” At the time back in the ‘80s New York metro area, over 80% of the people who were shopping to buy a car didn’t qualify. I said, “I want to go service that into the market.” I made some alliances with some finance companies and that these guys were absolute crooks. They were the gangsters. I said, “If these guys can do this, I can do this legitimately.” I went and I became a licensed finance company. In New York State, that’s not an easy thing to do. Nothing’s easy to do in New York, but I did it for a long time. You use your own money for a while and after a while, you run out of money. You are bringing in private investors. There are banks and finance companies that are unique, that are just boutique lenders for that end of the market. After a while, we were collecting $500,000 a month just in interest. We were doing well. I had lines of credit with asset-based lenders. I had one line for $65 million and a backup line for $15 million. That’s $80 million and thank God we never used the backup line. We came close at one time using the whole line, but we did well for a long period of time. This podcast is about private lending and if I go back and I think, “You’ve got to be able to put a price on an asset. You’ve got to be able to look and see document wise no matter what the asset is.” I used to loan money. I had loaned money on some of the craziest stuff. I’ve come out with that book. You’ve got a copy of it right there, <a href="https://www.amazon.in/Real-Estate-Rock-Stars-Industry-ebook/dp/B07G7GHM4P" rel="noopener external noreferrer nofollow" target="_blank">Real Estate Rock Stars</a>. I contributed to the first chapter inside the book. I didn’t write the whole book. I was asked to come on board with it and I talk all about my business model and I talk about how to protect investors, what you should do, what the steps are in general. I’m a pretty conservative borrower. I don’t like borrowing money, but if you can’t do business now, sooner or later you’re going to run out of cash. This is a quick story. I’d buy almost any damn thing if I could liquidate it. I learned from these two old timers from New York City. They were both old retired attorneys and they’d buy anything. They could make chicken soup out of a chicken crap. They called me up one day and I was buying a credit card paper and all kinds of notes and stuff from them and just liquidating it out in big volumes through my company. They called me up one day and say, “Where are you?” I said, “I’m in Long Island.” These guys said, “Move to Arizona. Get in your car. You’ve got to go to Connecticut for us. You’re in this deal.” I said, “What’s the deal?” He says, “We’re buying a submarine.” This was the craziest deal I ever did. He said, “You’re in.” I said, “What are you talking about?” He said, “You should just get in the car. Call me when you’re on the way.” Real Estate Rock Stars: Real Estate Leaders Rocking The Real Estate Industry Today I had a couple of loose ends that I need to take care of and I hop in the car. I’m driving up the New England Thruway and I’m heading up to Connecticut. I get them back on the phone and he says, “These guys will liquidate us. We’ll loan this guy money against this submarine.” I go, “Yes.” He goes, “He’s not going to make the first payment on it.” I was like, “How do you know that?” He was like, “I’m telling you, he’s not going to make the first payment.” I go, “What’s the deal?” “Instead of us just buying it, we’ll get a loan of money against that. You’re in for $150,000. We’ve got the rest of it handled.” What does that mean? We already got this thing sold. I didn’t say anything after that. He said, “Go up there. Pull up to the place. See if it’s in the water. That’s great. It means it floats. If it starts up and it runs, that’s even better. If it moves, that’s even better. It’s a celebration.” I wind up and I was up over there. There is this big black turd in the ground. It was a World War II whiskey sub. The guy had bought it up in Nova Scotia and it was decommissioned. Then he drove it down to Connecticut and he wanted to borrow some money against it. I show up there and the guy said, “Are you here to inspect it?” I go, “I guess so.” “Come on our board.” I said, “I’ll stay right here.” He started it up and the big wheels turned. All was well. I left and I was on the way back and I called him. I said, “Is this thing all right? It’s in the water.” He said, “It’s great.” About five six weeks later I called because I haven’t gotten the check, “What’s going on with this thing?” “It’s all being worked out.” It was about eight weeks. He said, “The guy defaulted so we foreclosed. We’re dicing it up. We’ll ship it to San Diego.” I said, “What does that mean?” “We’re cutting it up,” because you can’t put the thing on one trailer. They’re cutting it up in pieces and they’re selling it to a salvage company in California. They already had money from the guy. These guys were incredible. These guys are real hustlers. That was a lesson I learned early about knowing what a liquidation value was worth. If you’re going to buy an asset and you’re going to loan somebody money against something, you want to know what the quick liquidation value is if the crap hits the fan. That’s important. Without knowing the value, you’re gambling. I don’t mean to take over your shoulder. I have no problem doing it. It’s a great story. You went to Connecticut to look at a submarine. I can see a mobile home or maybe a hot rod car but a submarine. We made six figures on that one. I was happy on that. They sold it to us. They salvaged it supposedly. It was in pieces on trucks by the time I called the guy. About six, eight weeks into it, they had already cut the thing up and they were transporting it. They had a piece left in Connecticut. I’d like to continue down this tangent a little bit because you mentioned that you were buying and liquidating credit card paper. Run us through how that worked. Without knowing the value of what you’re buying is gambling. <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-049/&amp;text=Without%20knowing%20the%20value%20of%20what%20you%E2%80%99re%20buying%20is%20gambling.&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> Back in the day, I don’t know how it is nowadays because I don’t do that, but you could buy volumes, lots of defaulted credit card paper. This fellow was taking over companies that were going out of business. Let’s say a guy at a jewelry store and he had four or five different jewelry stores. When I say credit card paper, it was more like loan paper, this particular transaction. They originated millions of dollars and it was all just paper. Meaning, it wasn’t cash. I promised the pays. I don’t think the guys cost of goods was even 5% of what was writing the stuff for but it was crazy. It was marked that way up. When he was liquidating these buildings, he got everything. He was going to make it play and he says, “I’m going to buy everything. I’m going to buy all the assets. We’ve got the buildings, the furniture,” he got everything in it which included the account paper. When he put a liquidation value on this and that, I want to put it all on the paper. Some of the transactions were big. He also bought in a different transaction, he wants them taken over. It was a collection agency and he got a lot of accounts that they held in-house that they had purchased and he wants them shoveled out over to me. There was a lot of HSBC. I believe it was HSBC Bank many years ago. We started running this through our systems and most of the stuff was fraud and the people never existed. When they send you a credit card and all you’ve got to do is sign, they wouldn’t go by people’s addresses. Generally speaking, what the income is for the area. They’ll give anybody a $1,000 line. That’s where all this crap was, most of the stuff was a collective. We wasted a lot of time on that. I bought judgments in the past. You can make money with judgments if you know what you are doing. When anything you’re going to look at is going to be tied to a piece of real estate, you’re in the driver’s seat if you know what you are doing. You mentioned your business model in the book, Real Estate Rockstars. You do a little bit of landlording, some lease optioning and seller financing, but what does your business look like now? What I do now is I bring in private lenders, buy houses and finance them for the long haul. I like passive mailbox money. I’m not in getting big checks right away. I want to retire one day. I’m getting old. I love mailbox money. One thing I found when I was in the auto finance business was good times and bad times, no matter what. You might not be selling anything or you might not be financing anything, but money still comes in the door. That’s what I love. When you’re in a business, when you can manufacture a business like this, when you’re in a business where the money makes the money, now you’re in a business. In the home finance business or owner finance business, you’re limiting your income to how many units you can go out there and sell and finance. The long-term, since what you’re doing is facilitating financing, you’re selling money. You’re not selling a piece of real estate. I’m selling money. When you sell money and I’m writing 30 contracts on it, that’s forever money. I bring investors in for five and ten years and I just do interest only with them. I was at a REIA meeting. He’s all happy about this renovation that he did on this house, this rehab. Many people watch this stuff on TV and they think they’re going to make so much money. He’s talking about this and when he gets all finished, with all the money that he invested in this property, he takes out a calculator and goes, “What’s the net number before taxes?” It was less than 3.5%. This guy killed himself that put this thing together. I didn’t crack what it was with the guy or anything like that, he was a lot bigger than me anyway. I said, “The thing to do is just sit back and watch it.” I don’t know when this is going to hit the airwaves, but the stock market dropped 650 points. This is no ordinary mom and dad stock market. This is not the Wall Street that your dad invested in. The individual people or even if your company’s investing, we’re not big enough to be in the know as to what’s happening. They say this insider information is all illegal. It’s all over Wall Street and that’s how these guys are making their plays. We’re not big enough to being inside that club as they say to know how that’s going to work. Where does that leave us? If you’re investing on Wall Street, you’re gambling. It’s the biggest casino in the world. Private Lending: If you’re investing on Wall Street, you’re gambling. It’s the biggest casino in the world. You have absolutely no way of knowing what this stock is or whatever you invest in is going to be worth anything. After the meeting, I was giving away my book. A bunch of them came over and said, “What’s your strategy? How do you figure this and that? Why is what you do so much better than what happens on Wall Street? I’ve been investing in Wall Street for years.” I said, “How much money do you make?” They go, “Enough for a part-time job.” I said, “The big difference is the hedge.” “What’s a hedge?” I go, “If you buy a piece of stock, you buy one stock for $100 on Wall Street, you’re paying 100% of the value for that stock.” It costs you $100. A week from now for some reason, the stock loses 10% of its market value. Now it’s down to $90 a share. If you decide you want to get out, there are fees for getting out of it but let’s just say it’s $90 now. What do you do? Does the street tell you to reinvest it to just sit back and wait? Maybe it will go up. How many times are you going to sit there and stare at the business news and hopefully there is more good news that will help you maybe push this back up? I can’t do that and I can’t be responsible like that for an investor. I can’t tell somebody that that’s legitimate investing. My dad was a banker all his life. He invested some money in Wall Street and he never made a lot of money on it. I was raised saying, “Don’t gamble. There are no sure things in life.” Let’s change the numbers. Instead of $100, it’s $100,000. It’s a $100,000 house and you’re going to give me $60,000 on a first mortgage. That’s $0.60 on the dollar. That $40,000 is the hedge. It’s the spread. In order for your value to start dropping, in order for that mortgage, that value that you have, that note to take a big hit, that number from $100,000 has got to drop way down. That’s your hedge. That’s what banks look at. This as a bank model. If you don’t think so, ask yourself one question. Why are there banks on every corner throughout the United States? Why is it that you can put money into their bank and they’re only giving you a point two or three quarters of a point, 1% or maybe a point and a half. They turn around and put it out for five or six. They’re making money on your money arbitrage. That’s what they call it....

PLP-049 All Things Private Lending with Steve Driscoll

Alan Cowgill

The beauty in private lending is that private lenders get to set the rules. Alan Cowgill, owner of Colby Properties, LLC and President of Integrity Home Buyers, Inc., tells us how this goes down as he goes deep into raising private money. He shares how he got started in the whole real estate game, taking us into exit strategies, keeping investors and landlords safe, and paying private lenders. Alan also touches on 401(k)s and self-directed IRAs. Ending it with more great insights, he shares what he looks for in a lender and how communication is key. — Listen to the podcast here: The Art Of Raising Private Money with Alan Cowgill I’ll speak with Alan Cowgill who was the first person to put the concept of private lending into my noggin several years ago. I’m honored to have him on the show. Speaking of the show, you can probably tell that I’ve been making some changes here and there particularly in the format. Whereas I’ve gotten away from selling mid-roll advertisements mostly because I didn’t feel like it suited me. I like the flow of the show better without the adverts. I’m experimenting with that to see how it goes. I’ve also brought in some more plans, reevaluated a few things and I hope to broaden the topics of the interviews a little. I’m going to go into some areas that hopefully bring you, the reader value in other aspects of your life not just in investing in real estate. It’s very closely tied to all that. Let’s go ahead and cut to the chase and get to the interview with Alan Cowgill. — Lender Nation, I’m excited to introduce to you, Alan Cowgill, who is one of the people who got the private lending kernel in my brain about a decade ago. It’s an honor to have him on. Alan, welcome to the show. Thank you very much. I’m tickled to be here. This is exciting for me. To give the readers some background, I was introduced to Alan years ago. I went to a Larry Goins boot camp and he came up and said, “How many of you guys deal with private lenders? I need to work with private lenders.” Long story short, going to the real library, finding one of your old programs on cassette tape and whatnot, CD and trying to put it all together, here we are in 2019. I’m stoked. Thank you for coming on. Amongst the many questions that I have, I want to try to narrow it down for you to just a few. I’d like you to tell our readers how you got started in this whole real estate game. I was broke. I got a quarter century in Corporate America. As I was climbing that corporate ladder, one day, I realized I had the ladder against the wrong wall. I had to do something else with my life. I’d seen so many of my family members work a job all their life and retired poor. I thought, “I don’t want that to happen to me.” What I was going through, I was broke. Even though I had been successful in Corporate America, I was living in a little dinky two-bedroom apartment and I was struggling to pay my bills. What was happening is I had this old beat up car and I needed to put some repair work into it, but I put that on the backburner as we do. I was busy doing other things and paying my bills and going along. All of a sudden on a first date, this car paid me back. It’s an ugly story. I pulled up in front of this apartment complex to walk her to the door after our very first date. Halfway up to the door, I heard something, I turned around and looked at my car that had burst into flames. Keith, when I tell people this, when I speak on stage, somebody on the back room goes, “Hot date.” It’s more like first and last date. Can you imagine how embarrassing this is holding her hand, watching the firemen put your car out? Here’s this successful middle manager in Corporate America. He can’t even afford to get his car fixed. Every morning when she woke up, there was a burnt charred mark in her parking lot. What an impression did she make that apartment complex? I looked into franchises but they take money. I didn’t have the money to get a franchise. I was trying to figure out what to do outside of Corporate America. I did decide to invest. I took my whole federal tax return that year and plunk it down on lottery tickets. You’re thinking not the sharpest tool in the shed. I was worried about paying my bills one night. I couldn’t sleep. At [2:00] in the morning, I got up and turned on the TV and started to channel surf. I hit one of these real estate infomercials. It got my attention and I thought, “Maybe I can do this.” I picked up the phone. I ordered that home study system. I didn’t have the money to hardly do it because I spent my money on lottery tickets. They take a credit card. I ordered that system. I became enthralled with real estate. That year, I bought two houses in my very first year. The next year I bought five. The following year I bought eighteen. Since that point in time, I’ve done hundreds of real estate deals. Half the deals I do are without monthly payments. We can talk about that later on if you’d like because I’ve got private lenders but that’s how I got started in this business off the TV commercial. As a side note, I’m in three nationwide infomercials that’s played over the years. I was going to ask you, what program did you purchase? It was Carleton Sheets. He got a lot of people started way back then. Private Lending: In real estate, you focus in on what you hit on to what works, and you stay there.   What were your exit strategies? Were you flipping, buying and holding? When I started out, the first property I bought was a side-by-side double. The goal was to hold it. I started to do that for a few years, buy and hold. I’d buy duplexes and side-by-side doubles and got into some single-family homes. I decided that along the way I’d like to buy, fix and sell. I started doing that. I realized that the areas that I was buying in that people would move into the houses and many times do a rent-to-own on it. They’d tear the house up and leave. They had more of a renter mentality where I was buying. I had to move up into higher level property and that helped quite a bit. I call it the model. What model do you want in this business? I started out buy and hold, then I went in to buy and sell. It’s a learning experience. You focus in on what you hit on to what works and you stay there. How did you get introduced into private lenders? What happened was I’m coming up to my real estate education, I believe the foundation of business and it is exactly what you and I are doing right now, is training. I focused on getting a solid education in this business. I’d go to REIA events and I’d go to boot camps. I heard this thing about hard money lenders and private lenders. I thought they were the same thing. I thought it was interchangeable terms. It’s extremely different for one to the other one because with a hard money lender, they set the rules. They want to have money down so you’ve got some skin in the game. Mine wanted 15% down and that’s a showstopper for some people that are getting started. A 15% down and then they would have to get paid the way a hard money lender gets paid is they charge you with what they call points, which is a percent of how much money they loan you. They take that right off the settlement statement right off when you buy. That comes right out of your side of it. They want to turn this money over and over again. They put you on a short-term commitment on this where they have balloon payments. Typically, it’s within a year so that they can get that money back and get it working again, they can get another 5%. After a while though, I realized that private lenders were different. I realized that I got to set the rules. There are only four parts of a real estate deal at the very pinnacle, at the very top. Number one is you’ve got to find a property that’s good to buy. Number two is you’ve got to have money. Number three is you fix the property to enhance value. Number four is you’ll flip it or keep it long-term. If you can’t get by this second item, you’re dead in this business. What happens is any other place you go to look for money out there, somebody else is setting the rules like a bank and lending institutions. That’s what hard money lenders are, they set the rules. I realized with private lenders from my education of going to these events once I had this untangled, that I got to set the rules. That was so appealing to have one of the biggest of the four items out there where I could set my own financing rules. I went back to my mom. She had committed some money because my dad had passed away. She took that money. She had not been taking care of the finances in the house when we were growing up. She realized that she could plunk that money down on a bank certificate of deposit. She would study the rates. She would drive 45 minutes, one way to get a few pennies more on a CD because she knows she’d have to live off this money. This was twenty-something years ago. Now, she’s 93 years old. She’s still got some money out there. What happened was I went back to mom. I said, “You’re getting a paltry low rate of return on a bank CD. I can pay you three, four or five times from what you’re getting on a bank CD. I’ll give you a mortgage promissory note, a hazard insurance and lender title insurance,” and mom jumped for joy. I said, “I’ll even pay you monthly.” She loved that because that’s what the CD was doing. It was giving her a monthly income of a small amount. I could give her a lot more. Mom was my very first lender. What that did was by getting that first lender, it gives you the confidence to do it again, be able to talk to other people about it. It shows you the way how the paperwork’s handled. That got me out of the chute. That’s where I started. I won’t borrow from my parents. I have the same frustrations. We’re looking at their finances as I’m sure your mother’s CDs aren’t paying anything. The reason I like private lending so much is because I could keep my day job and yet still invest in real estate in a relatively passive insecure manner. There are some works and some due diligence upfront. I espouse a very conservative view because at the end of the day, if I tell somebody, “Don’t ever do a second position lien,” I do them. There are certain instances where I will do them but by and large, I tell people not to. I like the fact that you said you were able to set your financial terms. That’s to me the beauty of the private lenders is hard money lenders. They want those points because that’s their money. That’s where they make their profits. Any other place you go to look for money out there, somebody else is setting the rules.Click To Tweet The interest is usually going back to someone who they borrowed the money from at a lower rate, generally speaking. They want to turn that money over. Private lenders tend to want to keep the money working and not have the hassle of going around and originating alone every six months on a flip or something like that. I recommend people do that at first. You’ll get tired of the process every three to six months of loaning on a flip to learn the process. Get in there, see the nuts and bolts, see the machine, the gears and then back out. Lower your expectation on interest rate a little bit and watch how long people like yourself will use your money and keep it coming in month after month. That’s one of the things that attracted me to you when you spoke at the Goins boot camp. Now, you’re not just buying some flips or some rentals. You’re educating. You’ve got systems out there that I know took you a long time and a lot of the attorney’s fees to create. You keep people in line. Investors say if you show them the roadmap, I understand you’re not an attorney. You’ve used many of them to create this. It’s a roadmap of how an investor can stay safe especially with the Securities and Exchange Commission at the state and federal level. Whereas private lenders, we’re not regulated like that as long as we’re using our own money, we can do what we want. Check with your local state attorneys and whatnot. It’s the Wild West if it’s your money. If I borrowed your money, Alan, and then loaned it out, now we’re getting into a whole new, different situation. You figured this out. We’re in the same boat but on opposite sides. Walk us through how you keep investors who are the flippers and the landlords, how do you keep them safe? What happens is first off, I don’t touch their money. I have a good old form of closing. The reason that’s important is because we commit to the private lender that their money is secured by real estate, number one. You don’t want to violate what you tell the private lender. You do what you say. I don’t touch unsecured money. Early on, I would have private lenders that would be so excited about giving me money there. They’d want to hand me a check on the spot because they wanted to get that high rate of return. They were so tired of the low returns they were getting. I learned early on that you don’t touch those checks. You let them go through the closing. In Ohio, we can close with attorneys or title companies. Let’s say for an example that I’m talking to you and I asked you if you want to loan me money. You say, “I like to loan you $200,000.” The first thing I’ll do is I’ll use my up the ante technique where I’ll ask you, “If I find a deal worth 400,000, should I call you?” If you say, “Yes,” then I instantly went from $200,000 to $400,000. In fact, I had a lady in my boot camp. I’ve got a live event. She asked somebody for money and let the other person, that lender said, “I’ll loan you $100,000,” and my student used the up the ante technique I gave you. They went to $200,000. Within twenty seconds, she had her up to $900,000. She kept asking the same question. That’s how powerful the up the ante technique. To follow on how we handle this is I would shake your hand once you say, “We can do $400,000.” I’d shake your hand and I’d say, “You made a wise decision.” Then I shift into what I call the mechanics, which means I tell you how the money is handled because being a new private lender, you don’t know. You might think, “I’ve got to cut a check now or get Alan the check tomorrow.” I want you to understand going in how this works. What happens is you don’t make the check out to me. What we’re going to do is go to a formal closing like you would if you were at the bank. In fact, you are my bank. What will happen is I’ll have you wire the money into the closing that I tell you. I’ll call you up four to six weeks from now. We’ll close on the deal. I need you to be ready for that. “Does that work for you?” They always say yes. Let’s roll the clock forward. If I get down four weeks and I don’t have a property that I’m happy with for us, I will get ahold of you. Communication is so key with your private lenders because private lenders lend you money based on the fact that they trust you. You want to maintain that trust and keep everything out there that they understand what’s going on so they aren’t frustrated or confused. I would call you up and I’d say, “Just so you know, I don’t see anything right now in the market that is good for you and I, both together. Hang in there another four weeks and we’ll have something rolling.” They’re cool with that. What will happen is seven to ten days before closing, I’ll call you up, you send the wire in and we close. The lenders never ever go to closing. I’m so glad that you said those three words, “Communication is key,” because the lender takes on the role of the bank, but this isn’t a bank where the tellers change every two weeks and nobody knows your name except the fees keep going up and up. The other thing I liked that you said is the handshake. One of the things I like to think, at least I espouse on this podcast, is what I call old world values. If you give someone your word, you keep it. If you shake their hand, you look them in the eye, there’s your contract. Having said that, that’s the trust part. Now, you’ve got to verify. Get that contract in writing, notarized or whatever you need to do to keep yourself safe. I’m glad that you said that. Up to that point of where I up the ante with you now, everything before that, what I’m trying to do is attract private lenders in converting into private lenders. What will happen before that, I might invite them to a one-on-one meeting or I might have a group meeting. I’ll show my PowerPoint slides that I use. In fact, when I ratcheted up the business from when I got started after my mom, I decided to have a meeting with private lenders. I didn’t know if I was going to be alone or if I’d be up in there with 50 folks and eighteen people showed up. I had a PowerPoint slide presentation

The beauty in private lending is that private lenders get to set the rules. Alan Cowgill, owner of Colby Properties, LLC and President of Integrity Home Buyers, Inc., tells us how this goes down as he goes deep into raising private money. He shares how he got started in the whole real estate game, taking us into exit strategies, keeping investors and landlords safe, and paying private lenders. Alan also touches on 401(k)s and self-directed IRAs. Ending it with more great insights, he shares what he looks for in a lender and how communication is key. — <h3>Listen to the podcast here:</h3> <h2>The Art Of Raising Private Money with Alan Cowgill</h2> I’ll speak with <a href="https://www.alancowgill.com/kickstart2" rel="noopener external noreferrer nofollow" target="_blank">Alan Cowgill</a> who was the first person to put the concept of private lending into my noggin several years ago. I’m honored to have him on the show. Speaking of the show, you can probably tell that I’ve been making some changes here and there particularly in the format. Whereas I’ve gotten away from selling mid-roll advertisements mostly because I didn’t feel like it suited me. I like the flow of the show better without the adverts. I’m experimenting with that to see how it goes. I’ve also brought in some more plans, reevaluated a few things and I hope to broaden the topics of the interviews a little. I’m going to go into some areas that hopefully bring you, the reader value in other aspects of your life not just in investing in real estate. It’s very closely tied to all that. Let’s go ahead and cut to the chase and get to the interview with Alan Cowgill. — Lender Nation, I’m excited to introduce to you, <a href="https://www.alancowgill.com/kickstart2" rel="noopener external noreferrer nofollow" target="_blank">Alan Cowgill</a>, who is one of the people who got the private lending kernel in my brain about a decade ago. It’s an honor to have him on. Alan, welcome to the show. Thank you very much. I’m tickled to be here. This is exciting for me. To give the readers some background, I was introduced to Alan years ago. I went to a Larry Goins boot camp and he came up and said, “How many of you guys deal with private lenders? I need to work with private lenders.” Long story short, going to the real library, finding one of your old programs on cassette tape and whatnot, CD and trying to put it all together, here we are in 2019. I’m stoked. Thank you for coming on. Amongst the many questions that I have, I want to try to narrow it down for you to just a few. I’d like you to tell our readers how you got started in this whole real estate game. I was broke. I got a quarter century in Corporate America. As I was climbing that corporate ladder, one day, I realized I had the ladder against the wrong wall. I had to do something else with my life. I’d seen so many of my family members work a job all their life and retired poor. I thought, “I don’t want that to happen to me.” What I was going through, I was broke. Even though I had been successful in Corporate America, I was living in a little dinky two-bedroom apartment and I was struggling to pay my bills. What was happening is I had this old beat up car and I needed to put some repair work into it, but I put that on the backburner as we do. I was busy doing other things and paying my bills and going along. All of a sudden on a first date, this car paid me back. It’s an ugly story. I pulled up in front of this apartment complex to walk her to the door after our very first date. Halfway up to the door, I heard something, I turned around and looked at my car that had burst into flames. Keith, when I tell people this, when I speak on stage, somebody on the back room goes, “Hot date.” It’s more like first and last date. Can you imagine how embarrassing this is holding her hand, watching the firemen put your car out? Here’s this successful middle manager in Corporate America. He can’t even afford to get his car fixed. Every morning when she woke up, there was a burnt charred mark in her parking lot. What an impression did she make that apartment complex? I looked into franchises but they take money. I didn’t have the money to get a franchise. I was trying to figure out what to do outside of Corporate America. I did decide to invest. I took my whole federal tax return that year and plunk it down on lottery tickets. You’re thinking not the sharpest tool in the shed. I was worried about paying my bills one night. I couldn’t sleep. At [2:00] in the morning, I got up and turned on the TV and started to channel surf. I hit one of these real estate infomercials. It got my attention and I thought, “Maybe I can do this.” I picked up the phone. I ordered that home study system. I didn’t have the money to hardly do it because I spent my money on lottery tickets. They take a credit card. I ordered that system. I became enthralled with real estate. That year, I bought two houses in my very first year. The next year I bought five. The following year I bought eighteen. Since that point in time, I’ve done hundreds of real estate deals. Half the deals I do are without monthly payments. We can talk about that later on if you’d like because I’ve got private lenders but that’s how I got started in this business off the TV commercial. As a side note, I’m in three nationwide infomercials that’s played over the years. I was going to ask you, what program did you purchase? It was Carleton Sheets. He got a lot of people started way back then. Private Lending: In real estate, you focus in on what you hit on to what works, and you stay there. What were your exit strategies? Were you flipping, buying and holding? When I started out, the first property I bought was a side-by-side double. The goal was to hold it. I started to do that for a few years, buy and hold. I’d buy duplexes and side-by-side doubles and got into some single-family homes. I decided that along the way I’d like to buy, fix and sell. I started doing that. I realized that the areas that I was buying in that people would move into the houses and many times do a rent-to-own on it. They’d tear the house up and leave. They had more of a renter mentality where I was buying. I had to move up into higher level property and that helped quite a bit. I call it the model. What model do you want in this business? I started out buy and hold, then I went in to buy and sell. It’s a learning experience. You focus in on what you hit on to what works and you stay there. How did you get introduced into private lenders? What happened was I’m coming up to my real estate education, I believe the foundation of business and it is exactly what you and I are doing right now, is training. I focused on getting a solid education in this business. I’d go to REIA events and I’d go to boot camps. I heard this thing about hard money lenders and private lenders. I thought they were the same thing. I thought it was interchangeable terms. It’s extremely different for one to the other one because with a hard money lender, they set the rules. They want to have money down so you’ve got some skin in the game. Mine wanted 15% down and that’s a showstopper for some people that are getting started. A 15% down and then they would have to get paid the way a hard money lender gets paid is they charge you with what they call points, which is a percent of how much money they loan you. They take that right off the settlement statement right off when you buy. That comes right out of your side of it. They want to turn this money over and over again. They put you on a short-term commitment on this where they have balloon payments. Typically, it’s within a year so that they can get that money back and get it working again, they can get another 5%. After a while though, I realized that private lenders were different. I realized that I got to set the rules. There are only four parts of a real estate deal at the very pinnacle, at the very top. Number one is you’ve got to find a property that’s good to buy. Number two is you’ve got to have money. Number three is you fix the property to enhance value. Number four is you’ll flip it or keep it long-term. If you can’t get by this second item, you’re dead in this business. What happens is any other place you go to look for money out there, somebody else is setting the rules like a bank and lending institutions. That’s what hard money lenders are, they set the rules. I realized with private lenders from my education of going to these events once I had this untangled, that I got to set the rules. That was so appealing to have one of the biggest of the four items out there where I could set my own financing rules. I went back to my mom. She had committed some money because my dad had passed away. She took that money. She had not been taking care of the finances in the house when we were growing up. She realized that she could plunk that money down on a bank certificate of deposit. She would study the rates. She would drive 45 minutes, one way to get a few pennies more on a CD because she knows she’d have to live off this money. This was twenty-something years ago. Now, she’s 93 years old. She’s still got some money out there. What happened was I went back to mom. I said, “You’re getting a paltry low rate of return on a bank CD. I can pay you three, four or five times from what you’re getting on a bank CD. I’ll give you a mortgage promissory note, a hazard insurance and lender title insurance,” and mom jumped for joy. I said, “I’ll even pay you monthly.” She loved that because that’s what the CD was doing. It was giving her a monthly income of a small amount. I could give her a lot more. Mom was my very first lender. What that did was by getting that first lender, it gives you the confidence to do it again, be able to talk to other people about it. It shows you the way how the paperwork’s handled. That got me out of the chute. That’s where I started. I won’t borrow from my parents. I have the same frustrations. We’re looking at their finances as I’m sure your mother’s CDs aren’t paying anything. The reason I like private lending so much is because I could keep my day job and yet still invest in real estate in a relatively passive insecure manner. There are some works and some due diligence upfront. I espouse a very conservative view because at the end of the day, if I tell somebody, “Don’t ever do a second position lien,” I do them. There are certain instances where I will do them but by and large, I tell people not to. I like the fact that you said you were able to set your financial terms. That’s to me the beauty of the private lenders is hard money lenders. They want those points because that’s their money. That’s where they make their profits. Any other place you go to look for money out there, somebody else is setting the rules. <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-062/&amp;text=Any%20other%20place%20you%20go%20to%20look%20for%20money%20out%20there%2C%20somebody%20else%20is%20setting%20the%20rules.&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> The interest is usually going back to someone who they borrowed the money from at a lower rate, generally speaking. They want to turn that money over. Private lenders tend to want to keep the money working and not have the hassle of going around and originating alone every six months on a flip or something like that. I recommend people do that at first. You’ll get tired of the process every three to six months of loaning on a flip to learn the process. Get in there, see the nuts and bolts, see the machine, the gears and then back out. Lower your expectation on interest rate a little bit and watch how long people like yourself will use your money and keep it coming in month after month. That’s one of the things that attracted me to you when you spoke at the Goins boot camp. Now, you’re not just buying some flips or some rentals. You’re educating. You’ve got systems out there that I know took you a long time and a lot of the attorney’s fees to create. You keep people in line. Investors say if you show them the roadmap, I understand you’re not an attorney. You’ve used many of them to create this. It’s a roadmap of how an investor can stay safe especially with the Securities and Exchange Commission at the state and federal level. Whereas private lenders, we’re not regulated like that as long as we’re using our own money, we can do what we want. Check with your local state attorneys and whatnot. It’s the Wild West if it’s your money. If I borrowed your money, Alan, and then loaned it out, now we’re getting into a whole new, different situation. You figured this out. We’re in the same boat but on opposite sides. Walk us through how you keep investors who are the flippers and the landlords, how do you keep them safe? What happens is first off, I don’t touch their money. I have a good old form of closing. The reason that’s important is because we commit to the private lender that their money is secured by real estate, number one. You don’t want to violate what you tell the private lender. You do what you say. I don’t touch unsecured money. Early on, I would have private lenders that would be so excited about giving me money there. They’d want to hand me a check on the spot because they wanted to get that high rate of return. They were so tired of the low returns they were getting. I learned early on that you don’t touch those checks. You let them go through the closing. In Ohio, we can close with attorneys or title companies. Let’s say for an example that I’m talking to you and I asked you if you want to loan me money. You say, “I like to loan you $200,000.” The first thing I’ll do is I’ll use my up the ante technique where I’ll ask you, “If I find a deal worth 400,000, should I call you?” If you say, “Yes,” then I instantly went from $200,000 to $400,000. In fact, I had a lady in my boot camp. I’ve got a live event. She asked somebody for money and let the other person, that lender said, “I’ll loan you $100,000,” and my student used the up the ante technique I gave you. They went to $200,000. Within twenty seconds, she had her up to $900,000. She kept asking the same question. That’s how powerful the up the ante technique. To follow on how we handle this is I would shake your hand once you say, “We can do $400,000.” I’d shake your hand and I’d say, “You made a wise decision.” Then I shift into what I call the mechanics, which means I tell you how the money is handled because being a new private lender, you don’t know. You might think, “I’ve got to cut a check now or get Alan the check tomorrow.” I want you to understand going in how this works. What happens is you don’t make the check out to me. What we’re going to do is go to a formal closing like you would if you were at the bank. In fact, you are my bank. What will happen is I’ll have you wire the money into the closing that I tell you. I’ll call you up four to six weeks from now. We’ll close on the deal. I need you to be ready for that. “Does that work for you?” They always say yes. Let’s roll the clock forward. If I get down four weeks and I don’t have a property that I’m happy with for us, I will get ahold of you. Communication is so key with your private lenders because private lenders lend you money based on the fact that they trust you. You want to maintain that trust and keep everything out there that they understand what’s going on so they aren’t frustrated or confused. I would call you up and I’d say, “Just so you know, I don’t see anything right now in the market that is good for you and I, both together. Hang in there another four weeks and we’ll have something rolling.” They’re cool with that. What will happen is seven to ten days before closing, I’ll call you up, you send the wire in and we close. The lenders never ever go to closing. I’m so glad that you said those three words, “Communication is key,” because the lender takes on the role of the bank, but this isn’t a bank where the tellers change every two weeks and nobody knows your name except the fees keep going up and up. The other thing I liked that you said is the handshake. One of the things I like to think, at least I espouse on this podcast, is what I call old world values. If you give someone your word, you keep it. If you shake their hand, you look them in the eye, there’s your contract. Having said that, that’s the trust part. Now, you’ve got to verify. Get that contract in writing, notarized or whatever you need to do to keep yourself safe. I’m glad that you said that. Up to that point of where I up the ante with you now, everything before that, what I’m trying to do is attract private lenders in converting into private lenders. What will happen before that, I might invite them to a one-on-one meeting or I might have a group meeting. I’ll show my PowerPoint slides that I use. In fact, when I ratcheted up the business from when I got started after my mom, I decided to have a meeting with private lenders. I didn’t know if I was going to be alone or if I’d be up in there with 50 folks and eighteen people showed up. I had a PowerPoint slide presentation

PLP-062 The Art Of Raising Private Money with Alan Cowgill

They say that hard money lenders are the solution to any real estate investor’s funding impasse. On top of that, there’s been an evident confusion on the difference between hard and private money. What are the distinctions despite seen similarities? Which one should you prefer if you wanted to scale up your business? Learn the top three answers to what makes them poles apart when it comes to funding deals. — Listen to the podcast here: The Difference Between Hard Money And Private Money Intent, Flexibility And Rates Are The Key I want to take a moment and welcome you and also thank you for sharing your time with me. For this episode, I will attempt to answer a question that I hear a lot in the REIA or Real Estate Investment Association meetings in the community and yet hearing it in the flesh and then seeing things online. To me, there’s some confusion there. That is the simple question of what is the difference between hard money and private money? You can start with things like the difference in the terms. Both hard money and private money can be very short-term. In fact, most hard money loans are short-term, six to twelve months. However, the difference with private money is I have some loans that are out three years. Some lenders will provide landlords a ten to fifteen-year loan at a relatively reasonable interest rate at 5%, 6% and they’re completely comfortable with it. That wouldn’t be me. However, the real difference for me comes down to the intent and it’s not the intent of the loan or the intent of the property or the transaction. It’s the intent of the individual. For me, a private money lender or a private mortgage note investor is someone who is typically not in the business of making loans. It’s not Wells Fargo or Quicken Loans or name your mortgage company or big bank. Those companies are in the business of making loans and deriving their profits from the interest rates and the points charged. A hard money lender, like the banks or mortgage companies, is in the business of making loans and deriving business income off of those loans. The difference is a hard money lender will typically go to someone like myself or you who want to be a private lender and borrow at say 8% or 9%. Turn around and then loan that money out to an investor at a much higher interest rate. They get the points most of the time. As long as it's our money, it's our choice. Click To Tweet Some hard money lenders will pay the first lender much more, 10%, 11%. However, when they loan it out to the investors, they’re pulling off points and possibly the spread, the difference in between that interest. That’s a business. That’s not what I do. It’s not what I talk about when I talk about private money lending, private mortgages. That is in and of itself the biggest difference for me. When people ask me the question, that’s what I like to start. If you go online and I see there’s a private lender association, what it is are businesses that loan money to other businesses which, in a way, that’s what a private lender does. However, these people have offices and staff and it’s their job to look for financing for real estate deals or perhaps they could make loans for inventory or on accounts receivable. They’re often a different thing than giving somebody like my partner lending some money to buy a house and wrap it and sell it. The intent is the biggest thing. It makes the most sense if you look at it from that aspect to begin with. You can look at the terms. Most hard money lenders aren’t going to be as flexible as a private money lender. Any hard money lender, and I tell this to private lenders, is always get some type of monthly payment. That way, you have a mechanism for foreclosure. Don’t do a twelve-month loan with no payments due until the end of that twelve months and then in those twelve months, that house is sitting there. You could have done something to foreclose on it, but you can’t for a year because you have no trigger for default at that point. A hard money lender would never do that. I would suggest private money lenders never do that, but things are much more flexible on the private money side because many more things are open to negotiation. For example, the collateral. I have loaned money against property A so that the investor could go take care of property B. A lot of banks and hard money lenders will do that as well in the collateralization. However, I’ve also known some people to collateralize boats, RVs, basically anything that has a title and can be repossessed. I have known extreme cases where somebody has placed a very valuable piece of family jewelry in escrow at an attorney’s office for collateral. I guess it would be okay if it covers the price. That makes me whole if things go south. As a private lender, I think about that thing. These are some examples of the way you can get creative with collateral. You can go back and read episode number 59 with Nomi Yah when she talks about hypothecation and how she wants to construct her deals and her notes for cashflow. Tom Berry touched on that in episode 43 briefly with fractionalizing the loan. You can get some pretty creative things. You have a lot more flexibility as a private lender. Unfortunately, that also means that people can pull the heartstrings of a private lender sometimes a little more because it’s not a business. A hard money lender can look at a desperate investor in the eye and tell them, “I’m sorry, this deal doesn’t make sense.” When that investor says, “If I don’t do this, I go out of business or I have to go back and get another job or whatever.” A hard money lender is a businesswoman or a businessman. They’re going to look that investor in the eye and say, “This doesn’t fit the criteria.” To me, that is one of the few flaws and differences that private lending does have. If you’re a softy pussy cat, “That’s okay.” Private lending is not going to be for you. You can be a little generous here and there. You can always waive late fees if it’s a little late. There are mechanisms you can show mercy as a private lender. You’ll see that more and more with private lenders above hard money because hard money is business. I am trying to, as I go through this journey, meld those two things together. To be the Republican and the Democrat, as George Bush said, “The compassionate conservative.” I want to help people build neighborhoods. I do want responsible investing. Hard Versus Private Money: Private lenders have this wonderful little area that we can sit in between what the banks are charging and what hard money is charging.   I once had a professor that didn’t like his pension was tied up in Raytheon. It was a defense contractor. He didn’t like that and wanted his money out. He fully admitted he loved the return, but he didn’t like the fact that his money was with a defense contractor. I can respect that. With the real estate investing, the private lending you can have the element of conscientious lending, giving people chances, so on and so forth. It’s not all cut and dry, but I would highly recommend you start your foundation cut and dry. When the lines get blurred and you go from the black and white into the gray a little bit, at least you have some type of good footing and a good foundation from which all of your decisions are made. That’s why I say let’s take it real conservative in the beginning because you can always loosen up a bit, especially once you get going that you can start with the rates. For example, the number three difference. Private lenders have this wonderful little area that we can sit in between what the banks are charging and what hard money is charging. If you look at money as how much does it cost and that is out of pocket interest rates, points, time, processing the application all that stuff. Banks are traditionally lower. You can get a 30-year investment mortgage, 20% down between 4.5% to 5% depending on what part of the country you’re in. I’m going to use some bank rate stuff here. You can get a fifteen-year investor loan, 20% down and you get closer to 4% or under 4% in the rates. Whereas hard money is traditionally 12%, 15% or in some cases 18%. It depends on the usury laws of whatever state that you’re in. In Texas, it’s 18%. That includes points and interest rates. I have seen loans that go out with three points and 15% interest or two points and 16% interest. I’ve also seen one that was five points of interest and a 10% interest rate monthly or annualized, non-amortizing interest only. We as private lenders live in that sweet spot in between what the banks charge, not only on the numbers, points, interest and hard money. That leads the question this is all well and good, but some of you may or may not remember. If you’re reading this blog, you are either my age or older. That means you remember the 1980s. You remember the housing market and what happened. Normal mortgages were at 10% and 13%, regular mortgages, Freddie, Fannie stuff. It got crazy with interest rates. That begs the question, “What’s that going to do between hard money, banks and private lenders? What does that mean for them?” It’s going to squeeze this out from a number’s perspective. That means if we continue, we’ll have to get more and more creative because we are private, we’re not businesses, we’re not regulated. As long as it’s our money, it’s our choice. That’s what I’m looking forward to and fearing at the same time. It’s going to be interesting to see. We have this nice sweet spot that we’re in between banks and hard money lenders. With the blockchain coming, it is going to radically change the landscape, but we might not be talking about banks and hard money lenders in ten, twenty years. It might be a person to person. That whole industry may go away. We don’t know. It’s going to be cool but I hope I live long enough to see it and to be able to shift and to pivot around that when the interest rates rise. We’ll see what happens. Usury rates are at 18%. They may go up. I would love to own a lending business in North Dakota. The simple reason is because of their usury rate is tremendously high. In fact, most of your credit cards are domiciled in North Dakota. The world is your oyster. You can write up anything as long as it's legal.Click To Tweet In recap here, the main difference between hard money and private money. Number one is the intent. Is the lender for business or is the lender an investor? Maybe someone has a regular job or isn’t a real estate investor, has an old 401(k) but they’re not using it to derive consistent business income, but rather investment income. Number two, the flexibility on the terms and the collateral and what you can do as a private lender. You don’t have to answer to a board. It’s your call, it’s your negotiation. The world is your oyster. You can write up anything as long as it’s legal. That’s why you have to have a lawyer but within reason. You can negotiate that RV as collateral for a quick fix and flip. Number three, the rates. Stay between the rates, especially while we have it good as private lenders and let’s make sure that interest rates stay low. That’s my political message. Let’s make sure that interest rates stay reasonable and necessary, but low. I do appreciate you reading this. I want to tell you to stick around. I’ve got some cool interviews lined up. I’ve got some attorneys. You’ve read about them so far and they’re only going to get better and hopefully a little bit wilder. I hope they would deliver value to you. If they do deliver value, please go to iTunes, Google Podcast, Stitcher or SoundCloud and leave me a rating and review, please. That helps spread the word. It brings people awareness, people like you and me. We can find it a little easier. I would appreciate that greatly. Connect with me over on social channels: Facebook, Instagram, Twitter, LinkedIn and BiggerPockets. I do peruse those channels. Until next time, I wish you all a prosperous and happy investing in private lending. Take care. Important Links:  Real Estate Investment Association Episode number 59 with Nomi Yah Episode number 43 with Tom Berry Private Lender Podcast on iTunes Private Lender Podcast on Google Podcast Private Lender Podcast on Stitcher Private Lender Podcast on SoundCloud Private Lender Podcast on Facebook Private Lender Podcast on Instagram Private Lender Podcast on Twitter Keith Baker on LinkedIn Keith Baker on BiggerPockets    Love the show? Subscribe, rate, review, and share!  Here’s How »  Join the Private Lender Podcast community today:  PrivateLenderPodcast.com Private Lender Podcast Facebook Keith Baker on LinkedIn Private Lender Podcast Twitter Private Lender Podcast YouTube 

They say that hard money lenders are the solution to any real estate investor’s funding impasse. On top of that, there’s been an evident confusion on the difference between hard and private money. What are the distinctions despite seen similarities? Which one should you prefer if you wanted to scale up your business? Learn the top three answers to what makes them poles apart when it comes to funding deals. — <h3>Listen to the podcast here:</h3> <h2>The Difference Between Hard Money And Private Money</h2> <h3>Intent, Flexibility And Rates Are The Key</h3> I want to take a moment and welcome you and also thank you for sharing your time with me. For this episode, I will attempt to answer a question that I hear a lot in the REIA or <a href="https://www.reia.org/" rel="noopener external noreferrer nofollow" target="_blank">Real Estate Investment Association</a> meetings in the community and yet hearing it in the flesh and then seeing things online. To me, there’s some confusion there. That is the simple question of what is the difference between hard money and private money? You can start with things like the difference in the terms. Both hard money and private money can be very short-term. In fact, most hard money loans are short-term, six to twelve months. However, the difference with private money is I have some loans that are out three years. Some lenders will provide landlords a ten to fifteen-year loan at a relatively reasonable interest rate at 5%, 6% and they’re completely comfortable with it. That wouldn’t be me. However, the real difference for me comes down to the intent and it’s not the intent of the loan or the intent of the property or the transaction. It’s the intent of the individual. For me, a private money lender or a private mortgage note investor is someone who is typically not in the business of making loans. It’s not Wells Fargo or Quicken Loans or name your mortgage company or big bank. Those companies are in the business of making loans and deriving their profits from the interest rates and the points charged. A hard money lender, like the banks or mortgage companies, is in the business of making loans and deriving business income off of those loans. The difference is a hard money lender will typically go to someone like myself or you who want to be a private lender and borrow at say 8% or 9%. Turn around and then loan that money out to an investor at a much higher interest rate. They get the points most of the time. As long as it's our money, it's our choice. <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-063/&amp;text=As%20long%20as%20it%27s%20our%20money%2C%20it%27s%20our%20choice.%20&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> Some hard money lenders will pay the first lender much more, 10%, 11%. However, when they loan it out to the investors, they’re pulling off points and possibly the spread, the difference in between that interest. That’s a business. That’s not what I do. It’s not what I talk about when I talk about private money lending, private mortgages. That is in and of itself the biggest difference for me. When people ask me the question, that’s what I like to start. If you go online and I see there’s a private lender association, what it is are businesses that loan money to other businesses which, in a way, that’s what a private lender does. However, these people have offices and staff and it’s their job to look for financing for real estate deals or perhaps they could make loans for inventory or on accounts receivable. They’re often a different thing than giving somebody like my partner lending some money to buy a house and wrap it and sell it. The intent is the biggest thing. It makes the most sense if you look at it from that aspect to begin with. You can look at the terms. Most hard money lenders aren’t going to be as flexible as a private money lender. Any hard money lender, and I tell this to private lenders, is always get some type of monthly payment. That way, you have a mechanism for foreclosure. Don’t do a twelve-month loan with no payments due until the end of that twelve months and then in those twelve months, that house is sitting there. You could have done something to foreclose on it, but you can’t for a year because you have no trigger for default at that point. A hard money lender would never do that. I would suggest private money lenders never do that, but things are much more flexible on the private money side because many more things are open to negotiation. For example, the collateral. I have loaned money against property A so that the investor could go take care of property B. A lot of banks and hard money lenders will do that as well in the collateralization. However, I’ve also known some people to collateralize boats, RVs, basically anything that has a title and can be repossessed. I have known extreme cases where somebody has placed a very valuable piece of family jewelry in escrow at an attorney’s office for collateral. I guess it would be okay if it covers the price. That makes me whole if things go south. As a private lender, I think about that thing. These are some examples of the way you can get creative with collateral. You can go back and read episode number 59 with <a href="http://privatelenderpodcast.com/?s=59" rel="noopener nofollow" target="_blank">Nomi Yah</a> when she talks about hypothecation and how she wants to construct her deals and her notes for cashflow. <a href="http://privatelenderpodcast.com/?s=43" rel="noopener nofollow" target="_blank">Tom Berry</a> touched on that in episode 43 briefly with fractionalizing the loan. You can get some pretty creative things. You have a lot more flexibility as a private lender. Unfortunately, that also means that people can pull the heartstrings of a private lender sometimes a little more because it’s not a business. A hard money lender can look at a desperate investor in the eye and tell them, “I’m sorry, this deal doesn’t make sense.” When that investor says, “If I don’t do this, I go out of business or I have to go back and get another job or whatever.” A hard money lender is a businesswoman or a businessman. They’re going to look that investor in the eye and say, “This doesn’t fit the criteria.” To me, that is one of the few flaws and differences that private lending does have. If you’re a softy pussy cat, “That’s okay.” Private lending is not going to be for you. You can be a little generous here and there. You can always waive late fees if it’s a little late. There are mechanisms you can show mercy as a private lender. You’ll see that more and more with private lenders above hard money because hard money is business. I am trying to, as I go through this journey, meld those two things together. To be the Republican and the Democrat, as George Bush said, “The compassionate conservative.” I want to help people build neighborhoods. I do want responsible investing. Hard Versus Private Money: Private lenders have this wonderful little area that we can sit in between what the banks are charging and what hard money is charging. I once had a professor that didn’t like his pension was tied up in Raytheon. It was a defense contractor. He didn’t like that and wanted his money out. He fully admitted he loved the return, but he didn’t like the fact that his money was with a defense contractor. I can respect that. With the real estate investing, the private lending you can have the element of conscientious lending, giving people chances, so on and so forth. It’s not all cut and dry, but I would highly recommend you start your foundation cut and dry. When the lines get blurred and you go from the black and white into the gray a little bit, at least you have some type of good footing and a good foundation from which all of your decisions are made. That’s why I say let’s take it real conservative in the beginning because you can always loosen up a bit, especially once you get going that you can start with the rates. For example, the number three difference. Private lenders have this wonderful little area that we can sit in between what the banks are charging and what hard money is charging. If you look at money as how much does it cost and that is out of pocket interest rates, points, time, processing the application all that stuff. Banks are traditionally lower. You can get a 30-year investment mortgage, 20% down between 4.5% to 5% depending on what part of the country you’re in. I’m going to use some bank rate stuff here. You can get a fifteen-year investor loan, 20% down and you get closer to 4% or under 4% in the rates. Whereas hard money is traditionally 12%, 15% or in some cases 18%. It depends on the usury laws of whatever state that you’re in. In Texas, it’s 18%. That includes points and interest rates. I have seen loans that go out with three points and 15% interest or two points and 16% interest. I’ve also seen one that was five points of interest and a 10% interest rate monthly or annualized, non-amortizing interest only. We as private lenders live in that sweet spot in between what the banks charge, not only on the numbers, points, interest and hard money. That leads the question this is all well and good, but some of you may or may not remember. If you’re reading this blog, you are either my age or older. That means you remember the 1980s. You remember the housing market and what happened. Normal mortgages were at 10% and 13%, regular mortgages, Freddie, Fannie stuff. It got crazy with interest rates. That begs the question, “What’s that going to do between hard money, banks and private lenders? What does that mean for them?” It’s going to squeeze this out from a number’s perspective. That means if we continue, we’ll have to get more and more creative because we are private, we’re not businesses, we’re not regulated. As long as it’s our money, it’s our choice. That’s what I’m looking forward to and fearing at the same time. It’s going to be interesting to see. We have this nice sweet spot that we’re in between banks and hard money lenders. With the blockchain coming, it is going to radically change the landscape, but we might not be talking about banks and hard money lenders in ten, twenty years. It might be a person to person. That whole industry may go away. We don’t know. It’s going to be cool but I hope I live long enough to see it and to be able to shift and to pivot around that when the interest rates rise. We’ll see what happens. Usury rates are at 18%. They may go up. I would love to own a lending business in North Dakota. The simple reason is because of their usury rate is tremendously high. In fact, most of your credit cards are domiciled in North Dakota. The world is your oyster. You can write up anything as long as it's legal. <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-063/&amp;text=The%20world%20is%20your%20oyster.%20You%20can%20write%20up%20anything%20as%20long%20as%20it%27s%20legal.&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> In recap here, the main difference between hard money and private money. Number one is the intent. Is the lender for business or is the lender an investor? Maybe someone has a regular job or isn’t a real estate investor, has an old 401(k) but they’re not using it to derive consistent business income, but rather investment income. Number two, the flexibility on the terms and the collateral and what you can do as a private lender. You don’t have to answer to a board. It’s your call, it’s your negotiation. The world is your oyster. You can write up anything as long as it’s legal. That’s why you have to have a lawyer but within reason. You can negotiate that RV as collateral for a quick fix and flip. Number three, the rates. Stay between the rates, especially while we have it good as private lenders and let’s make sure that interest rates stay low. That’s my political message. Let’s make sure that interest rates stay reasonable and necessary, but low. I do appreciate you reading this. I want to tell you to stick around. I’ve got some cool interviews lined up. I’ve got some attorneys. You’ve read about them so far and they’re only going to get better and hopefully a little bit wilder. I hope they would deliver value to you. If they do deliver value, please go to <a href="https://itunes.apple.com/us/podcast/the-private-lender-podcast/id1329204836?mt=2" rel="noopener external noreferrer nofollow" target="_blank">iTunes</a>, <a href="https://play.google.com/music/listen?u=0#/ps/I7yw4xyms54xwcn4og464jodwtm" rel="noopener external noreferrer nofollow" target="_blank">Google Podcast</a>, <a href="https://www.stitcher.com/podcast/private-lender-podcast/the-private-lender-podcast" rel="noopener external noreferrer nofollow" target="_blank">Stitcher</a> or <a href="https://soundcloud.com/user-355136493" rel="noopener external noreferrer nofollow" target="_blank">SoundCloud</a> and leave me a rating and review, please. That helps spread the word. It brings people awareness, people like you and me. We can find it a little easier. I would appreciate that greatly. Connect with me over on social channels: <a href="https://www.facebook.com/PrivateLenderPodcast/" rel="noopener external noreferrer nofollow" target="_blank">Facebook</a>, <a href="https://www.instagram.com/privatelenderpodcast/" rel="noopener external noreferrer nofollow" target="_blank">Instagram</a>, <a href="https://twitter.com/PrivLendPodcast?lang=en" rel="noopener external noreferrer nofollow" target="_blank">Twitter</a>, <a href="https://www.linkedin.com/in/keith-baker-344944155/" rel="noopener external noreferrer nofollow" target="_blank">LinkedIn</a> and <a href="https://www.biggerpockets.com/users/keithbaker" rel="noopener external noreferrer nofollow" target="_blank">BiggerPockets</a>. I do peruse those channels. Until next time, I wish you all a prosperous and happy investing in private lending. Take care. <h3>Important Links:</h3> <ul> <li><a href="https://www.reia.org/" rel="noopener external noreferrer nofollow" target="_blank">Real Estate Investment Association</a></li> <li>Episode number 59 with <a href="http://privatelenderpodcast.com/?s=59" rel="noopener nofollow" target="_blank">Nomi Yah</a></li> <li>Episode number 43 with <a href="http://privatelenderpodcast.com/?s=43" rel="noopener nofollow" target="_blank">Tom Berry</a></li> <li>Private Lender Podcast on <a href="https://itunes.apple.com/us/podcast/the-private-lender-podcast/id1329204836?mt=2" rel="noopener external noreferrer nofollow" target="_blank">iTunes</a></li> <li>Private Lender Podcast on <a href="https://play.google.com/music/listen?u=0#/ps/I7yw4xyms54xwcn4og464jodwtm" rel="noopener external noreferrer nofollow" target="_blank">Google Podcast</a></li> <li>Private Lender Podcast on <a href="https://www.stitcher.com/podcast/private-lender-podcast/the-private-lender-podcast" rel="noopener external noreferrer nofollow" target="_blank">Stitcher</a></li> <li>Private Lender Podcast on <a href="https://soundcloud.com/user-355136493" rel="noopener external noreferrer nofollow" target="_blank">SoundCloud</a></li> <li>Private Lender Podcast on <a href="https://www.facebook.com/PrivateLenderPodcast/" rel="noopener external noreferrer nofollow" target="_blank">Facebook</a></li> <li>Private Lender Podcast on <a href="https://www.instagram.com/privatelenderpodcast/" rel="noopener external noreferrer nofollow" target="_blank">Instagram</a></li> <li>Private Lender Podcast on <a href="https://twitter.com/PrivLendPodcast?lang=en" rel="noopener external noreferrer nofollow" target="_blank">Twitter</a></li> <li>Keith Baker on <a href="https://www.linkedin.com/in/keith-baker-344944155/" rel="noopener external noreferrer nofollow" target="_blank">LinkedIn</a></li> <li>Keith Baker on <a href="https://www.biggerpockets.com/users/keithbaker" rel="noopener external noreferrer nofollow" target="_blank">BiggerPockets</a></li> </ul> Love the show? Subscribe, rate, review, and share! <ul> <li><a href="http://privatelenderpodcast.com/blog/how-to-subscribe-rate-our-podcast-5-stars-on-itunes/" rel="noopener nofollow" target="_blank">Here’s How »</a></li> </ul> Join the Private Lender Podcast community today: <ul> <li><a href="http://privatelenderpodcast.com/" rel="noopener nofollow" target="_blank">PrivateLenderPodcast.com</a></li> <li><a href="https://www.facebook.com/PrivateLenderPodcast/" rel="noopener external noreferrer nofollow" target="_blank">Private Lender Podcast Facebook</a></li> <li><a href="https://www.linkedin.com/in/keith-baker-344944155/" rel="noopener external noreferrer nofollow" target="_blank">Keith Baker on LinkedIn</a></li> <li><a href="https://twitter.com/PrivLendPodcast?lang=en" rel="noopener external noreferrer nofollow" target="_blank">Private Lender Podcast Twitter</a></li> <li><a href="https://www.youtube.com/channel/UCzctXatpCAOhF0XeV1fq2dQ?view_as=subscriber" rel="noopener external noreferrer nofollow" target="_blank">Private Lender Podcast YouTube</a></li> </ul>

PLP-063 The Difference Between Hard Money And Private Money

Corey Peterson

Sometimes it’s in the things that go wrong where we get the best lessons in life. In this episode, let Corey Peterson, the owner of Kahuna Investments, inspire you with his rags-to-riches story. When a day of disappointing his son made him realize that he was not living life on his terms, Corey set out on a bold journey to learn how to raise capital to achieve financial freedom. This once car salesman went on to become a real estate expert, raising capital in the millions and finally getting his piece of “sunsets and palm trees.” He talks about how his eagerness to learn and to adapt to changing trends led him to investing and private lending and to the success he is today. — Listen to the podcast here: Investing And Private Lending with Corey Peterson I’d like to thank you for stopping by. The other thing I’d like to thank you for is lending me your time. If you’re looking for practical tips and advice on mitigating and eliminating risks with your private mortgage lending, then you are in the right place. If you’re going to learn from my mistakes so that you can avoid them, then pull up a chair because I created this show for those select individuals who are looking to take control of their financial future by doing what it takes to create wealth in the marathon of life with old-world techniques and values. I’m looking to create a tribe of lenders that will disrupt the way we think about money and how we can grow wealth. I also want to change the way we teach our kids about money. I think it’s antiquated to say the least. Before I get in our episode, I wanted to invite you out to the Quest Trust Company Self-Directed IRA Expo, which is going to happen in August 23rd through the 25th, 2019 at the Royal Sonesta Hotel in Houston. I believe there are tickets still available. I know the VIPs have sold out, but the general admission, which are still a good deal are available. Go to PrivateLenderPodcast.com/expo for the link there for tickets and use the promo code, PLPodcast, for your 25% discount. For this show, I had a gentleman reached out to me and said, “I’d like to be on your show.” I said, “What do you do?” “I do apartments.” I was like, “Perfect,” because my idea for the show, the first year it would be all single-family. The second year, we would move into some multifamily. However, this is a fluid dynamic podcast as all things in this life. I’ll have some multifamily experts to come on. Our guest, Corey Peterson, I believe he’s out in Arizona. He reached out and I got in contact with him. I like him enough. I’ll put him on the show because I want someone to start scratching the surface on multifamily. I’m not saying I’ll do it every month, but I would definitely at least a couple of times a year in 2019 to touch on multifamily and how private lenders can fit into the syndications and other things. I like Corey. He’s letting people know what he does and they can reach out to him, which is the right way to do it. He can explain and build that rapport, build that relationship so he can invest under the auspices of the SEC. I want to put it out there for the Lender Nation because I know some of you have inquired about multifamily and other things besides just single-family. This is my first foray into multifamily. Let’s go ahead and get down to the brass tacks and to the interview with Corey Peterson. — I am honored to have Corey Peterson on the show. Corey is the Owner of Kahuna Investments and he strives to provide his investors with stable cashflow returns and long-term capital appreciation by buying multifamily apartments. Corey has managed to acquire over $95 million in real estate across the country and he’s the first multifamily investor on the show. Corey, welcome. Thanks for coming on.  Thanks for having me. Let’s hear the hero story. Let’s hear the origin story. How did you fall into real estate? The truth is you fall into real estate. I grew up as a small-town country farm boy, and let’s say that I didn’t get the download from the mothership until I was 32. I barely made it out of high school. I didn’t have a degree. When you don’t have a degree, you’ve got to manage some crap or you’ve got to sell some crap. I sold used cars until I met my wife or my girlfriend, and she became my wife for seventeen years by the way. She told me that she couldn’t marry a car salesman. I became a restaurant manager and then she didn’t see me, because I worked a lot of hours in the car business. Almost eighteen years ago, something radically happened that changed my life. I went to Hawaii. My mom was married to this guy. His name is Bruce. I call him Bruce Wayne. He wasn’t Batman, but he was loaded. He had a house right on the beach in Hawaii. My girlfriend, now my wife of several years, we got to go there for a vacation and it was magical. I remember waking up early in the morning going across the barn with toes in the water. The waves were crashing, it’s on a cove. We walk the cove and all of a sudden, the sun decides to start rising. As it was rising, the mist from the waves was creating a magical light. My wife and I, we stood hand in hand, transfixed for about fifteen or twenty minutes and watched it all happened. It was like a rebirth had happened. I remember looking over on the other side of Bruce’s house and I’m like, “What does this guy do? He’s got time, he’s got money, he’s got fine art, nice cars.” He has it going on and his phone was not ringing. I finally got the guts to ask him. He owns apartments and he’s in real estate. I wish the story got better because Bruce was a prick. He was a grumpy, old man. He wasn’t going to help teach me real estate, but he did give me what I call the perfect vision of what I call now as the cashflow life should look like, sunsets and palm trees on your terms. He gave me what it should look like. About six months later, I read that book, Rich Dad, Poor Dad. When I read it, I was like, “That’s Bruce.” It made it very real for me. I started my company in 2005. I named it Kahuna Investments because I looked at Bruce and Bruce was the big Kahuna and I wanted to be the same thing. I went on a journey as everybody else does. I started off as a wholesaler because I had no money, no credit, no idea what to do. I went to the local REIAs. I’m a smart cat. I barely made it out of high school, but I’m resourceful as hell and I got a lot of common sense. I would ask the guy that runs the REIA, “Who are the guys that are doing deals?” He’d be like, “This guy.” I sat next to all the guys that were doing the deals. I’d be like, “What does your deal look like? Where do you find them? What’s your average profit?” I’m just taking orders. I’m like, “I’ll find deals like that.” Whether I did or not it didn’t matter. I started wholesaling to these guys and then something that I got good at, it happened by accident. I learned how to raise private money. These are for single-family deals because you always make a $3,000 $4,000 wholesaling fee. This is back when you found these on the MLS, REO’s and short-sales. I was making $3,000, $4,000. The guys that I was trying the rehabs for, they were obviously investors who were making $25,000 or $30,000. I was like, “I’ve got to flip the script.” I was asking a retired guy that I played racquetball with for his help because he lived in a retirement community and I didn’t think he had any extra money. As long as I was asking him as a friend, I’m like, “Carl, you’re watching what I’m doing, wholesaling. I’m making $3,000. The guys are making $25,000. Surely, I can just pay an interest, give someone a note, deed and trust. Let me know if you know anybody in that neighborhood.” The next day, Carl called me, “Corey, you don’t know this but my home is totally paid for. I can borrow money at 3% and give you 12%. I can make a spread. How much money do you need?” This is when I got to breathe deep for a couple of minutes. I was like, “Carl, I need $85,000.” He was like, “When do you want me to send it?” It was just like that. My chin hit the floor. I equate it to this. I went into a telephone booth as Clark Kent and I came out of that thing as Superman. Investing And Private Lending: Identify your limiting beliefs and break them.   That is your superhero story.  Once I figured out private money and seen a lot of people out there, you probably have a lot of limiting beliefs. I know I did. I bought myself. Was I good enough for private money? Would people give it to me? What if they knew that I had filed bankruptcy? What if they knew? All the things, all the baggage that I had? What I found is it doesn’t matter. When I raised that first piece, it broke every limiting belief that I had. My eyes were wide open and I realized that there’s a process to raising money. I mastered the process and I found good mentors. I’m averaging $3 million to $4 million free within a year to do single-family fix and flips. In 2011, I was running probably about $4 million or $5 million of capital doing single-family fix and flips. The market started to change. It was getting harder to find deals. I am the person of the least resistance. All I knew how to do at this point in time was find deals on the MLS, short sales and REO’s. I have $4 million behind me saying, “Corey, put me to work.” I stumbled on apartments. I was like, “I’ve got to figure out a place to put this money.” It’s actually a longer pain story, honestly, because I was really screwing up and the epitome of doing all these fix and flips, I actually was becoming a bad debt. What happened is my son looks at me one day and he said, “Dad, are you going to be at my game tomorrow?” I’m like, “Yeah, no problem, son. You tell me.” Inside I was like, “I’ve got to look at three properties. I hadn’t sold those up.” I woke up early in the morning and I’m going to get to these properties and I’ll be back in time for the game. Long story short, I got at the end of the game and did my son came off the soccer field and cried and just said, “Dad, you promised.” I’m telling you, it broke me, the pursuit of money and all that because out to the world, I would look super successful. I was dying inside because I didn’t have a fold in my business. I wasn’t living Bruce’s cashflow life. I was a damn train wreck. Kids are resilient and even though I’m hurting him, he still wants to get in my truck and drive home. That was even worse because as I’m driving, he was crying the whole time and it’s killing me. I dropped him off and my wife gives me this look like, “You better fix this.” I get in my car, I go drive and I’m beating myself like, “You’re an idiot, Corey. Why would you think about putting everything first besides your family?” I’m crying out to God for forgiveness and in that solitude, I finally forgive myself and asked God for forgiveness. I’m driving in a very empty state of mind. I drive by an apartment complex and I’ve driven by it a million times. I used to say, I wish I can order an apartment complex, but that day and that moment I said, “How can I own an apartment complex?” That changed everything. My life totally went on a different fork. It took about a year and a half to figure out how to buy apartments and how to underwrite them and all that stuff. I bought my first apartment complex in 2011. I sold it a couple of years ago. I bought it for $3.2 million. I sold it for $8.8 million. That’s a pretty good payday. That’s a good catch for a long way. Now we own $95 million worth of capital. We closed $25 million last year, raised $12 million. I am now living that life that Bruce talks about. I have tranquility in my business. That’s my rags to riches story. It’s a journey. It still is, but what I would say the one thing that I’ve learned how to do more than the other guys that started at the same time that were doing single-family, fix and flip or wholesale or any of that is the ability to raise capital. That one thing, me being able to talk with people and get people’s money and then direct it to where I tell them they need to give it to or spend it or give to me so I can spend it. That one thing is why I’m a multi-millionaire and some of my friends are still just trying and stuck in that hustle and grind mode. Learning how to raise capital is the key if you asked me. There are two things I want to touch on. One is raising capital. The whole reason I have this show is to help people. You can become a private lender, you can do this. It’s legal, it’s allowed by the IRS, it’s all these things. Most of us, we start with single-family and we move in and I took into the multifamily. I’m trying to switch my gears slowly but surely out of that single-family. I’m not doing as many deals going into apartments, but also being mindful that places like Dallas Fort Worth are just on fire and at some point, they’re not going to be.  I’m putting my toes in the water and slowly finding everything out about multifamily. I had a mentor at a mastermind actually. It’s episode one, Steven Kaufman who owns the Zeus Mortgage Bank. I took his mastermind and he did this great example of a $200,000 home. You’re going to buy it for this, you’re going to put this much into it. At the end of it, you’re going to rent for this or you’re going to sell it. He drew a line down the side and on the right side of that number he goes, “Just add another zero.” That’s it. That’s all you have to do for commercial. There’s environmental, there are a few tweaks of due diligence that are obviously different. By and large, you’re talking about that mindset and limiting beliefs. Don’t let the extra zero run away. In a world of constant change, be a person of the least resistance.Click To Tweet My net worth grew substantially when I was not afraid to add another zero. It’s the same amount of work. Actually, it’s a lot less work. Last year we did three projects, three deals, that’s it. Not 120, not 50, just three. It’s $25 million worth of deals though. You look at that scaling of that process, and the truth is there is so much money out there and it’s looking for people like me, for dealmakers. What you’re teaching us is great because we compete. Let’s talk about money. When I’m raising capital for my projects, I say, “What’s my avatar?” Who am I looking to get money from and who am I not? I typically am not looking for what I call the smart money. It’s Wall Street, hedge funds, all that stuff because they want a ridiculous amount of a return for their money. What I focused on is the main street, my main street investor. It’s not Wall Street. These are the guys that have money, million dollars or accredited and non-accredited. We do both, but these are the typical people that are in the stock market and they have mutual funds and bonds or a 401(k) or something like that. When I compete against the stock market, I can win 90% of the time. I really can because what we offer in our product gives a better return than most alternatives without the craziness, the rollercoaster ride that most people aren’t currently on. That’s the avatar. What I focus on is how do I talk to you more mom and pops, normal people that are looking for alternatives to the stock market? There is a crazy number of people that are out there and a lot of them don’t even know they can do real estate in their retirement accounts. Our biggest thing is educating people because most people don’t have lots of money in cash. It’s in their IRAs. Once you can educate them on that process, then they’re like, “I can use my retirement money to fund an apartment. Syndication, how does that work?” Once you say the word syndication, that’s a goal. “What’s going up?” It’s not as difficult as most people think. What is syndication? When Corey does a deal, he hires a syndication lawyer. He puts together this a hundred-page document that costs about $10,000 to $15,000 we’re not wired to do. In that document, it gives all the risks of my deal, the waterflow, who gets paid first, who gets paid second. It really becomes my operating bible on how I’m supposed to work. Because it’s federally mandated, if I don’t follow the rules, I can go, I don’t look good in stripes. Do you think I’m going to follow the rules? Yes. It gives me how I’m supposed to pay what I’m supposed to pay. In my...

Sometimes it’s in the things that go wrong where we get the best lessons in life. In this episode, let <a href="https://www.linkedin.com/in/KahunaInvestments/?locale=de_DE" rel="noopener external noreferrer nofollow" target="_blank">Corey Peterson</a>, the owner of <a href="https://kahunainvestments.com/" rel="noopener external noreferrer nofollow" target="_blank">Kahuna Investments</a>, inspire you with his rags-to-riches story. When a day of disappointing his son made him realize that he was not living life on his terms, Corey set out on a bold journey to learn how to raise capital to achieve financial freedom. This once car salesman went on to become a real estate expert, raising capital in the millions and finally getting his piece of “sunsets and palm trees.” He talks about how his eagerness to learn and to adapt to changing trends led him to investing and private lending and to the success he is today. — <h3>Listen to the podcast here:</h3> <h2>Investing And Private Lending with Corey Peterson</h2> I’d like to thank you for stopping by. The other thing I’d like to thank you for is lending me your time. If you’re looking for practical tips and advice on mitigating and eliminating risks with your private mortgage lending, then you are in the right place. If you’re going to learn from my mistakes so that you can avoid them, then pull up a chair because I created this show for those select individuals who are looking to take control of their financial future by doing what it takes to create wealth in the marathon of life with old-world techniques and values. I’m looking to create a tribe of lenders that will disrupt the way we think about money and how we can grow wealth. I also want to change the way we teach our kids about money. I think it’s antiquated to say the least. Before I get in our episode, I wanted to invite you out to the Quest Trust Company Self-Directed IRA Expo, which is going to happen in August 23rd through the 25th, 2019 at the Royal Sonesta Hotel in Houston. I believe there are tickets still available. I know the VIPs have sold out, but the general admission, which are still a good deal are available. Go to <a href="http://privatelenderpodcast.com/expo/" rel="noopener nofollow" target="_blank">PrivateLenderPodcast.com/expo</a> for the link there for tickets and use the promo code, PLPodcast, for your 25% discount. For this show, I had a gentleman reached out to me and said, “I’d like to be on your show.” I said, “What do you do?” “I do apartments.” I was like, “Perfect,” because my idea for the show, the first year it would be all single-family. The second year, we would move into some multifamily. However, this is a fluid dynamic podcast as all things in this life. I’ll have some multifamily experts to come on. Our guest, <a href="https://kahunainvestments.com/" rel="noopener external noreferrer nofollow" target="_blank">Corey Peterson</a>, I believe he’s out in Arizona. He reached out and I got in contact with him. I like him enough. I’ll put him on the show because I want someone to start scratching the surface on multifamily. I’m not saying I’ll do it every month, but I would definitely at least a couple of times a year in 2019 to touch on multifamily and how private lenders can fit into the syndications and other things. I like Corey. He’s letting people know what he does and they can reach out to him, which is the right way to do it. He can explain and build that rapport, build that relationship so he can invest under the auspices of the SEC. I want to put it out there for the Lender Nation because I know some of you have inquired about multifamily and other things besides just single-family. This is my first foray into multifamily. Let’s go ahead and get down to the brass tacks and to the interview with Corey Peterson. — I am honored to have Corey Peterson on the show. Corey is the Owner of <a href="https://kahunainvestments.com/" rel="noopener external noreferrer nofollow" target="_blank">Kahuna Investments</a> and he strives to provide his investors with stable cashflow returns and long-term capital appreciation by buying multifamily apartments. Corey has managed to acquire over $95 million in real estate across the country and he’s the first multifamily investor on the show. Corey, welcome. Thanks for coming on. Thanks for having me. Let’s hear the hero story. Let’s hear the origin story. How did you fall into real estate? The truth is you fall into real estate. I grew up as a small-town country farm boy, and let’s say that I didn’t get the download from the mothership until I was 32. I barely made it out of high school. I didn’t have a degree. When you don’t have a degree, you’ve got to manage some crap or you’ve got to sell some crap. I sold used cars until I met my wife or my girlfriend, and she became my wife for seventeen years by the way. She told me that she couldn’t marry a car salesman. I became a restaurant manager and then she didn’t see me, because I worked a lot of hours in the car business. Almost eighteen years ago, something radically happened that changed my life. I went to Hawaii. My mom was married to this guy. His name is Bruce. I call him Bruce Wayne. He wasn’t Batman, but he was loaded. He had a house right on the beach in Hawaii. My girlfriend, now my wife of several years, we got to go there for a vacation and it was magical. I remember waking up early in the morning going across the barn with toes in the water. The waves were crashing, it’s on a cove. We walk the cove and all of a sudden, the sun decides to start rising. As it was rising, the mist from the waves was creating a magical light. My wife and I, we stood hand in hand, transfixed for about fifteen or twenty minutes and watched it all happened. It was like a rebirth had happened. I remember looking over on the other side of Bruce’s house and I’m like, “What does this guy do? He’s got time, he’s got money, he’s got fine art, nice cars.” He has it going on and his phone was not ringing. I finally got the guts to ask him. He owns apartments and he’s in real estate. I wish the story got better because Bruce was a prick. He was a grumpy, old man. He wasn’t going to help teach me real estate, but he did give me what I call the perfect vision of what I call now as the cashflow life should look like, sunsets and palm trees on your terms. He gave me what it should look like. About six months later, I read that book, <a href="https://www.amazon.com/Rich-Dad-Poor-Robert-Kiyosaki-dp-0368959090/dp/0368959090/ref=mt_hardcover?_encoding=UTF8&amp;me=&amp;qid=" rel="noopener external noreferrer nofollow" target="_blank">Rich Dad, Poor Dad</a>. When I read it, I was like, “That’s Bruce.” It made it very real for me. I started my company in 2005. I named it Kahuna Investments because I looked at Bruce and Bruce was the big Kahuna and I wanted to be the same thing. I went on a journey as everybody else does. I started off as a wholesaler because I had no money, no credit, no idea what to do. I went to the local REIAs. I’m a smart cat. I barely made it out of high school, but I’m resourceful as hell and I got a lot of common sense. I would ask the guy that runs the REIA, “Who are the guys that are doing deals?” He’d be like, “This guy.” I sat next to all the guys that were doing the deals. I’d be like, “What does your deal look like? Where do you find them? What’s your average profit?” I’m just taking orders. I’m like, “I’ll find deals like that.” Whether I did or not it didn’t matter. I started wholesaling to these guys and then something that I got good at, it happened by accident. I learned how to raise private money. These are for single-family deals because you always make a $3,000 $4,000 wholesaling fee. This is back when you found these on the MLS, REO’s and short-sales. I was making $3,000, $4,000. The guys that I was trying the rehabs for, they were obviously investors who were making $25,000 or $30,000. I was like, “I’ve got to flip the script.” I was asking a retired guy that I played racquetball with for his help because he lived in a retirement community and I didn’t think he had any extra money. As long as I was asking him as a friend, I’m like, “Carl, you’re watching what I’m doing, wholesaling. I’m making $3,000. The guys are making $25,000. Surely, I can just pay an interest, give someone a note, deed and trust. Let me know if you know anybody in that neighborhood.” The next day, Carl called me, “Corey, you don’t know this but my home is totally paid for. I can borrow money at 3% and give you 12%. I can make a spread. How much money do you need?” This is when I got to breathe deep for a couple of minutes. I was like, “Carl, I need $85,000.” He was like, “When do you want me to send it?” It was just like that. My chin hit the floor. I equate it to this. I went into a telephone booth as Clark Kent and I came out of that thing as Superman. Investing And Private Lending: Identify your limiting beliefs and break them. That is your superhero story. Once I figured out private money and seen a lot of people out there, you probably have a lot of limiting beliefs. I know I did. I bought myself. Was I good enough for private money? Would people give it to me? What if they knew that I had filed bankruptcy? What if they knew? All the things, all the baggage that I had? What I found is it doesn’t matter. When I raised that first piece, it broke every limiting belief that I had. My eyes were wide open and I realized that there’s a process to raising money. I mastered the process and I found good mentors. I’m averaging $3 million to $4 million free within a year to do single-family fix and flips. In 2011, I was running probably about $4 million or $5 million of capital doing single-family fix and flips. The market started to change. It was getting harder to find deals. I am the person of the least resistance. All I knew how to do at this point in time was find deals on the MLS, short sales and REO’s. I have $4 million behind me saying, “Corey, put me to work.” I stumbled on apartments. I was like, “I’ve got to figure out a place to put this money.” It’s actually a longer pain story, honestly, because I was really screwing up and the epitome of doing all these fix and flips, I actually was becoming a bad debt. What happened is my son looks at me one day and he said, “Dad, are you going to be at my game tomorrow?” I’m like, “Yeah, no problem, son. You tell me.” Inside I was like, “I’ve got to look at three properties. I hadn’t sold those up.” I woke up early in the morning and I’m going to get to these properties and I’ll be back in time for the game. Long story short, I got at the end of the game and did my son came off the soccer field and cried and just said, “Dad, you promised.” I’m telling you, it broke me, the pursuit of money and all that because out to the world, I would look super successful. I was dying inside because I didn’t have a fold in my business. I wasn’t living Bruce’s cashflow life. I was a damn train wreck. Kids are resilient and even though I’m hurting him, he still wants to get in my truck and drive home. That was even worse because as I’m driving, he was crying the whole time and it’s killing me. I dropped him off and my wife gives me this look like, “You better fix this.” I get in my car, I go drive and I’m beating myself like, “You’re an idiot, Corey. Why would you think about putting everything first besides your family?” I’m crying out to God for forgiveness and in that solitude, I finally forgive myself and asked God for forgiveness. I’m driving in a very empty state of mind. I drive by an apartment complex and I’ve driven by it a million times. I used to say, I wish I can order an apartment complex, but that day and that moment I said, “How can I own an apartment complex?” That changed everything. My life totally went on a different fork. It took about a year and a half to figure out how to buy apartments and how to underwrite them and all that stuff. I bought my first apartment complex in 2011. I sold it a couple of years ago. I bought it for $3.2 million. I sold it for $8.8 million. That’s a pretty good payday. That’s a good catch for a long way. Now we own $95 million worth of capital. We closed $25 million last year, raised $12 million. I am now living that life that Bruce talks about. I have tranquility in my business. That’s my rags to riches story. It’s a journey. It still is, but what I would say the one thing that I’ve learned how to do more than the other guys that started at the same time that were doing single-family, fix and flip or wholesale or any of that is the ability to raise capital. That one thing, me being able to talk with people and get people’s money and then direct it to where I tell them they need to give it to or spend it or give to me so I can spend it. That one thing is why I’m a multi-millionaire and some of my friends are still just trying and stuck in that hustle and grind mode. Learning how to raise capital is the key if you asked me. There are two things I want to touch on. One is raising capital. The whole reason I have this show is to help people. You can become a private lender, you can do this. It’s legal, it’s allowed by the IRS, it’s all these things. Most of us, we start with single-family and we move in and I took into the multifamily. I’m trying to switch my gears slowly but surely out of that single-family. I’m not doing as many deals going into apartments, but also being mindful that places like Dallas Fort Worth are just on fire and at some point, they’re not going to be. I’m putting my toes in the water and slowly finding everything out about multifamily. I had a mentor at a mastermind actually. It’s episode one, <a href="http://privatelenderpodcast.com/001-2/" rel="noopener nofollow" target="_blank">Steven Kaufman</a> who owns the <a href="https://zeuslending.com/zeusmortgagebank/" rel="noopener external noreferrer nofollow" target="_blank">Zeus Mortgage Bank</a>. I took his mastermind and he did this great example of a $200,000 home. You’re going to buy it for this, you’re going to put this much into it. At the end of it, you’re going to rent for this or you’re going to sell it. He drew a line down the side and on the right side of that number he goes, “Just add another zero.” That’s it. That’s all you have to do for commercial. There’s environmental, there are a few tweaks of due diligence that are obviously different. By and large, you’re talking about that mindset and limiting beliefs. Don’t let the extra zero run away. In a world of constant change, be a person of the least resistance. <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-083/&amp;text=In%20a%20world%20of%20constant%20change%2C%20be%20a%20person%20of%20the%20least%20resistance.&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> My net worth grew substantially when I was not afraid to add another zero. It’s the same amount of work. Actually, it’s a lot less work. Last year we did three projects, three deals, that’s it. Not 120, not 50, just three. It’s $25 million worth of deals though. You look at that scaling of that process, and the truth is there is so much money out there and it’s looking for people like me, for dealmakers. What you’re teaching us is great because we compete. Let’s talk about money. When I’m raising capital for my projects, I say, “What’s my avatar?” Who am I looking to get money from and who am I not? I typically am not looking for what I call the smart money. It’s Wall Street, hedge funds, all that stuff because they want a ridiculous amount of a return for their money. What I focused on is the main street, my main street investor. It’s not Wall Street. These are the guys that have money, million dollars or accredited and non-accredited. We do both, but these are the typical people that are in the stock market and they have mutual funds and bonds or a 401(k) or something like that. When I compete against the stock market, I can win 90% of the time. I really can because what we offer in our product gives a better return than most alternatives without the craziness, the rollercoaster ride that most people aren’t currently on. That’s the avatar. What I focus on is how do I talk to you more mom and pops, normal people that are looking for alternatives to the stock market? There is a crazy number of people that are out there and a lot of them don’t even know they can do real estate in their retirement accounts. Our biggest thing is educating people because most people don’t have lots of money in cash. It’s in their IRAs. Once you can educate them on that process, then they’re like, “I can use my retirement money to fund an apartment. Syndication, how does that work?” Once you say the word syndication, that’s a goal. “What’s going up?” It’s not as difficult as most people think. What is syndication? When Corey does a deal, he hires a syndication lawyer. He puts together this a hundred-page document that costs about $10,000 to $15,000 we’re not wired to do. In that document, it gives all the risks of my deal, the waterflow, who gets paid first, who gets paid second. It really becomes my operating bible on how I’m supposed to work. Because it’s federally mandated, if I don’t follow the rules, I can go, I don’t look good in stripes. Do you think I’m going to follow the rules? Yes. It gives me how I’m supposed to pay what I’m supposed to pay. In my...

PLP-083 Investing And Private Lending with Corey Peterson

Amy Wan

Not all are mindful of the laws that go along with private lending since some lenders base their transaction on relationships and trust. Although it all boils down to trust, being well-informed of the legal aspects of private lending will not harm anyone. In today’s time, there is a practical reality that people trying to raise a small amount of capital have limited ability to be compliant with securities laws, and this is what Attorney Amy Wan delves into. Founder and CEO of Bootstrap Legal, Amy breaks down the types of rules, regulations, and securities in private lending. As she explains when an investment loan becomes security, Amy reveals that lenders are much less regulated when you lend your own money to another investor. She goes in-depth on the event when you need to have a license when making loans, the legal documents required with investors, the process she does that make legal matters and paperwork less stressful to clients, and how she has brought digital and legal to smaller investors. On the side, she shares details about her podcast show, Law and Blockchain. — Listen to the podcast here: Private Lending And The SEC with Attorney Amy Wan Syndicating, Private Lending And SEC Compliance I’d like to welcome you to this episode. I’m very grateful to have the pleasure of speaking with an attorney who happens to specialize in helping investors handling the paperwork and the filings required by the SEC, Securities Exchange Commission. My guest, Amy Wan, has an impressive resume to say the least. She lives on the leading edge of the financial and legal tech world and was named one of the Ten Women to Watch in Legal Tech by the ABA Journal, that’s the American Bar Association. I’m honored and grateful to have her on the show. I have a new slogan that I actually put on a Private Lender Podcast t-shirt. The back says, “Never trust, always verify.” Nonetheless, never trust, always verify is a perfect segue into an interview with an SEC attorney. Let’s go ahead and get down to the brass tacks and let’s get to the interview with Amy Wan. — I’ve got a special treat for you. Our guest is Amy Wan, Founder and CEO of Bootstrap Legal. I am excited to have her on the show. Amy, welcome to the show. Thank you for having me. Thank you for coming out and being interviewed. You deal in an area of expertise of the law that’s beyond my scope of understanding. You’re bringing it down to where people like me can participate, and I definitely want to get into that part of it. I promise we’ll keep this about 30,000 feet as much as possible and we’ll drill down when we need to because I know the law. You can go down some rabbit holes. Tell us a little bit about yourself and how you became the securities and syndication guru that you are. I actually started my career in the federal government. We were doing interesting things in DC, international trade and international regulatory affairs. When I moved back to LA, there’s not much of an international trade law industry out in LA except for import-export compliance paperwork which was very different from negotiating free trade agreements. I started over. I became general counsel of an early stage real estate crowdfunding platform at that time. The interesting thing about that crowdfunding platform is that I had to deal with two different areas of law, one on the real estate lending side and then one on the actual security side. We did private lending. We would make hard money, private money loans to folks flipping houses and then we would fractionalize those loans and turn it into a security and sell it to accredited investors through our marketplace. I spent a couple of years there and I learned the ins and outs of both of those different sides of the industry. I went on to become a partner at a boutique law firm that focused pretty much exclusively on a real estate syndication, more so the equity side and then it got interesting. I got to a point in my practice where I was spending every day writing the same fund documents over and over again. I thought this is inefficient. I befriended someone who was beginning in the syndication industry at the time. He’s now a large real estate syndication influencer. Back then, he came to me and said, “I want to raise $300,000 through syndication. How much will it cost?” I told him, “I’ll tell you the price. I know you’re not going to use me because the transaction cost doesn’t make sense.” Sure enough, I told him the price. He fled the other direction and I thought, “This is interesting. Folks trying to raise a small amount of capital have very limited ability to actually be compliant with securities laws.” The SEC doesn’t care about that. I had dinner with a couple of folks from the SEC. I brought this up to them and they were like, “You still have to follow all of the securities laws anyway. I’m like, “I get that, but there’s this practical reality.” Given that I had worked at a tech startup, I thought I could do better. I whipped up some software. It’s like the TurboTax of real estate syndication and it actually automates the first draft of a lot of the paperwork that you need to sell a security. For me as an attorney, it’s great because I cut off twenty hours off of drafting, but it’s great for my clients because I can get them the documents faster. My prices tend to be a little bit lower because I’m so much more efficient. I’m not one of those attorneys who bills by the hour. I do flat fees and it makes so much more sense. I heard you first on Kevin Bupp’s podcast a while ago. I was commuting to work and I was thinking, “I’ve got to get Amy on to talk about this. A lot of our audience will call or email and they’ll talk about the security side of things, the SEC and what investors or borrowers would have to do.” As I understand is that they issue the certificates or they issue the security. The SEC is concerned with them. On the private lending side, what type of rules and regulations do we have? I’ll back it up. Let’s look at it from, “I’m going to make a loan on the single-family house versus my best friend is going to get into an apartment complex and he’s syndicating twenty people together to get the equity stake so that we can go get the funds.” From a federal perspective, how do the investors and the lenders look? When it comes to lending law itself, although there are some federal regulations and laws around lending generally, most of those are in the consumer context. When it comes to private money, a lot of this is done from a state regulation perspective. When you get into state lending laws, it varies state by state. Some states require you to have a license to do this. Some states don’t care. Some states, for example California, you can make a small number of loans and then after you reached that limit, then you have to have that license. There are different types of licenses you need. It’s all over the map. Generally, there are a couple of things that folks should keep in mind. One of these things is usury rates. A loan that is usurious is when you’re charging too much for interest. Every state has a different usury rate. You generally do not want to go over it because the states and the regulators do not take kindly upon that, although in this market, it’s not much of a problem because the rates are significantly lower than they were a couple of years ago. Usury is one. Another thing to keep in mind is securities. If it’s one person lending to another person, that’s usually fine. When it’s multiple people banding together to lend to one person or even multiple people, then we have to think about a different set of laws. That’s securities laws. At the end of the day, it all comes down to trust.Click To Tweet The last thing is it depends on what you’re lending on. If we’re talking about single-family residential, lending to owner-occupied is different from lending to non-owner occupied. When it’s non-owner occupied, generally you’re lending to some LLC. There is a business entity. They’re a business bank account. The person is not supposed to live in it. There is a language in the actual loan documents that say, “This is a business purpose loan. I won’t use any of this for personal or household expenses.” Contrast that with when you’re lending in the owner-occupied context, suddenly that becomes a consumer loan. It’s not a commercial loan and that is very heavily regulated. I do a lot of loans to people who do seller financing. It’s Dodd-Frank. There are lots of hoops we go through. We have it originated and there’s the test to make sure that that person can pay the mortgage and you’re not dodging them. You said it perfectly, once it becomes a consumer loan, then the regulators and the judges are not going to look favorably upon you. I don’t care if it is out of your Roth IRA. If you’re doing something wrong, they’re going to get you. Not only that, it’s not just a whole different set of rules, but a different philosophy or mentality applies. If you’re lending to non-owner occupied, people are like, “It’s a business loan. It’s all for business.” You’re presumed to be sophisticated and all that stuff. When you’re doing a consumer loan and you end up going to court or something like that, then suddenly it’s not like, “A business loan deal went south.” It is, “You’re kicking someone out of their home.” It’s suddenly a much bigger deal. The states where they tend to be blue states or places where it’s a large metropolitan area, the judges in those jurisdictions are going to scrutinize this a lot more in favor of the borrower than the lenders. Be aware of all of that. I tell people who want to be private lenders is to don’t go owner-occupied, not until you get a lot of experience and you get a legal team built behind you that can handle all this for you. The lawyers are there for their help. They’re there to keep us compliant and also to say, “I see you put this language in here, this can happen,” or “This is your worst-case scenario. Why don’t you try this?” It’s funny you mentioned usury laws because Quincy Long at Quest IRA always says, “What’s a little usury amongst friends? We all know each other here.” The way I understand it is there are no usury police out there. However, in Texas, 18% is our usury law. Let’s say I make a loan for 20% and I anger that borrower somehow, in some way. That borrower can go to court, take it to a judge and the judge says, “This is a usurious contract. It’s null and void and you don’t even have to pay that guy back his money.” It’s not exactly the same, but I liken it to landlord-tenant law. There are many places where just because the tenant complains, everyone bends over backward for a tenant as opposed to the landlord. It sucks, it’s business and you don’t want to be in that situation. From a securities perspective on the federal level, everyone’s got to check your own state. It would be worthwhile saying we’re not offering to sell any securities or anything like that. This does not constitute an attorney-client contract with you or anybody else. From the federal level, as long as a lender is making it person to person, it’s a business loan from me to a real estate investor to do a flip or a landlord wants to hold it for three years or whatever. There’s very little regulation on that. There may be some. Check with your state. From the federal level, the SEC, they’re pretty cool with it. The SEC doesn’t deal with this whole lot, except to the extent that you get multiple investors involved. This tends to be on a very state level and it tends to be a very commercial discussion. The other big issue is licensing. Do you need a license to be making these loans, to be brokering them? That’s a state by state discussion. In most states, for non-owner occupied lending, you usually don’t need a license. There’s a handful of states where you do. There are several states that offer several different types of licensure. You could be a regular real estate broker, you can be a mortgage broker, you can be a loan broker or things of that sort. It’s a state by state discussion. I do actually like that. The feds are like, “We’re going to make sure that you’re not taking advantage of anybody and then we’ll let everything else fall to the state.” You talked about brokering. I wanted to bring that up because in Texas, we’re a red state, but we’re pretty liberal when it comes to things like oilfields and guns. We’re awesome. We have a very short foreclosure process. I love to lend here. I’ll give you a scenario of maybe something I’ve thought about doing here, or maybe it’s something I’ve done. Let’s say that I find a deal, but I’ve already tapped out all my money out of my self-directed IRA and I don’t have any cash. I negotiate a loan to an investor and then I have somebody else fund it. Can I get a couple of points? Can they get the points off of the loan at closing or would I be considered a broker in the eyes of the feds? The feds don’t care, but your state regulators are going to care. That’s one of those situations where you are going to have to figure out whether you need a loan brokering or a mortgage brokering license from your specific state. We don’t have security in Texas until you get 30 people. It leads me to my next question. I want to get in your expertise because I don’t want to let you go and listen. Let’s say I’m making this step up. I’m going from my single-family. I’m an investor now, not just a private lender, but I want to become an active investor. I’m not going to go run out and sponsor syndication for a 200-unit apartment complex. As someone who is a single-family investor and lender, walk us through. A friend of mine is going to sponsor this deal. He’s putting it all together. He’s getting legal. He’s got his memorandum together and everything. Walk us through what you would suggest I look for as I go through my first syndication. Private Lending: When one person’s making a loan to another person, it is just a straight up loan. When we get ten investors to invest in a fund and make a lot of private loans to flippers, that’s security.   The first thing I’ll mention is that notes or debt instruments can be considered a security. When I said when one person’s making a loan to another person, that’s not a security, that’s just a straight up loan. When we get into fancier things where it’s like, “I’m going to get ten investors to invest in a fund which is going to make a lot of private loans to flippers or something like that,” suddenly, that’s security. In terms of what is and is not a security, there’s a very well-defined test on that. It’s called the Howey Test and it’s named after a dude named Howey. It’s a four-part test. What people are looking for to figure out whether or not you’re selling security is generally there’s an investment of money. It’s a common enterprise of people. It’s not one person to one person, but a group of people. The folks who are putting their money in are expecting some profit or possibly a loss. Lastly and very importantly is that it’s based off the efforts of another or a third party. What that means is if you have all active investors, if you have some investor club where everyone says, “We’re all going to source deals together and whoever finds a good deal, we might all invest in it.” That’s not a security because it’s more like an educational group. If it’s something like, “I’m due diligencing all these deals that come in through the pipeline. I’ve determined that this one’s good. I may be putting some of my money in it or I don’t have to, but you guys are all going to invest money. I’m going to organize everything, package it all together and make the loan. I would do all the investor relations, all of that and check foreclosure. You guys don’t have to be involved. I will take care of that. Whatever profits come back, I’m going to distribute them to you.” Instead of an active investor situation, you’ve got a passive investor situation. There’s one person or a couple of people who are part of the sponsoring team where they’re handling the day-to-day operations. All the people who are putting the money in, they are passive. They don’t want to deal with it. They are paying you to deal with it. You’re looking at situations where it’s the doctor that’s investing or the dentist who’s investing. They don’t want to be active investors themselves. They just want to invest money somewhere and then hopefully it makes them money. That’s when we’re talking about securities laws. Securities in the private lending context, it comes in a couple of different forms. The most popular form I see is someone wants to start some fund that makes hard money or private money loans all day long. They...

Not all are mindful of the laws that go along with private lending since some lenders base their transaction on relationships and trust. Although it all boils down to trust, being well-informed of the legal aspects of private lending will not harm anyone. In today’s time, there is a practical reality that people trying to raise a small amount of capital have limited ability to be compliant with securities laws, and this is what Attorney Amy Wan delves into. Founder and CEO of Bootstrap Legal, Amy breaks down the types of rules, regulations, and securities in private lending. As she explains when an investment loan becomes security, Amy reveals that lenders are much less regulated when you lend your own money to another investor. She goes in-depth on the event when you need to have a license when making loans, the legal documents required with investors, the process she does that make legal matters and paperwork less stressful to clients, and how she has brought digital and legal to smaller investors. On the side, she shares details about her podcast show, Law and Blockchain. — <h3>Listen to the podcast here:</h3> <h2>Private Lending And The SEC with Attorney Amy Wan</h2> <h3>Syndicating, Private Lending And SEC Compliance</h3> I’d like to welcome you to this episode. I’m very grateful to have the pleasure of speaking with an attorney who happens to specialize in helping investors handling the paperwork and the filings required by the SEC, Securities Exchange Commission. My guest, <a href="http://www.amywanlaw.com/" rel="noopener external noreferrer nofollow" target="_blank">Amy Wan</a>, has an impressive resume to say the least. She lives on the leading edge of the financial and legal tech world and was named one of the Ten Women to Watch in Legal Tech by the ABA Journal, that’s the American Bar Association. I’m honored and grateful to have her on the show. I have a new slogan that I actually put on a Private Lender Podcast t-shirt. The back says, “Never trust, always verify.” Nonetheless, never trust, always verify is a perfect segue into an interview with an SEC attorney. Let’s go ahead and get down to the brass tacks and let’s get to the interview with Amy Wan. — I’ve got a special treat for you. Our guest is Amy Wan, Founder and CEO of <a href="https://www.bootstraplegal.com/" rel="noopener external noreferrer nofollow" target="_blank">Bootstrap Legal</a>. I am excited to have her on the show. Amy, welcome to the show. Thank you for having me. Thank you for coming out and being interviewed. You deal in an area of expertise of the law that’s beyond my scope of understanding. You’re bringing it down to where people like me can participate, and I definitely want to get into that part of it. I promise we’ll keep this about 30,000 feet as much as possible and we’ll drill down when we need to because I know the law. You can go down some rabbit holes. Tell us a little bit about yourself and how you became the securities and syndication guru that you are. I actually started my career in the federal government. We were doing interesting things in DC, international trade and international regulatory affairs. When I moved back to LA, there’s not much of an international trade law industry out in LA except for import-export compliance paperwork which was very different from negotiating free trade agreements. I started over. I became general counsel of an early stage real estate crowdfunding platform at that time. The interesting thing about that crowdfunding platform is that I had to deal with two different areas of law, one on the real estate lending side and then one on the actual security side. We did private lending. We would make hard money, private money loans to folks flipping houses and then we would fractionalize those loans and turn it into a security and sell it to accredited investors through our marketplace. I spent a couple of years there and I learned the ins and outs of both of those different sides of the industry. I went on to become a partner at a boutique law firm that focused pretty much exclusively on a real estate syndication, more so the equity side and then it got interesting. I got to a point in my practice where I was spending every day writing the same fund documents over and over again. I thought this is inefficient. I befriended someone who was beginning in the syndication industry at the time. He’s now a large real estate syndication influencer. Back then, he came to me and said, “I want to raise $300,000 through syndication. How much will it cost?” I told him, “I’ll tell you the price. I know you’re not going to use me because the transaction cost doesn’t make sense.” Sure enough, I told him the price. He fled the other direction and I thought, “This is interesting. Folks trying to raise a small amount of capital have very limited ability to actually be compliant with securities laws.” The SEC doesn’t care about that. I had dinner with a couple of folks from the SEC. I brought this up to them and they were like, “You still have to follow all of the securities laws anyway. I’m like, “I get that, but there’s this practical reality.” Given that I had worked at a tech startup, I thought I could do better. I whipped up some software. It’s like the TurboTax of real estate syndication and it actually automates the first draft of a lot of the paperwork that you need to sell a security. For me as an attorney, it’s great because I cut off twenty hours off of drafting, but it’s great for my clients because I can get them the documents faster. My prices tend to be a little bit lower because I’m so much more efficient. I’m not one of those attorneys who bills by the hour. I do flat fees and it makes so much more sense. I heard you first on Kevin Bupp’s podcast a while ago. I was commuting to work and I was thinking, “I’ve got to get Amy on to talk about this. A lot of our audience will call or email and they’ll talk about the security side of things, the SEC and what investors or borrowers would have to do.” As I understand is that they issue the certificates or they issue the security. The SEC is concerned with them. On the private lending side, what type of rules and regulations do we have? I’ll back it up. Let’s look at it from, “I’m going to make a loan on the single-family house versus my best friend is going to get into an apartment complex and he’s syndicating twenty people together to get the equity stake so that we can go get the funds.” From a federal perspective, how do the investors and the lenders look? When it comes to lending law itself, although there are some federal regulations and laws around lending generally, most of those are in the consumer context. When it comes to private money, a lot of this is done from a state regulation perspective. When you get into state lending laws, it varies state by state. Some states require you to have a license to do this. Some states don’t care. Some states, for example California, you can make a small number of loans and then after you reached that limit, then you have to have that license. There are different types of licenses you need. It’s all over the map. Generally, there are a couple of things that folks should keep in mind. One of these things is usury rates. A loan that is usurious is when you’re charging too much for interest. Every state has a different usury rate. You generally do not want to go over it because the states and the regulators do not take kindly upon that, although in this market, it’s not much of a problem because the rates are significantly lower than they were a couple of years ago. Usury is one. Another thing to keep in mind is securities. If it’s one person lending to another person, that’s usually fine. When it’s multiple people banding together to lend to one person or even multiple people, then we have to think about a different set of laws. That’s securities laws. At the end of the day, it all comes down to trust. <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-066/&amp;text=At%20the%20end%20of%20the%20day%2C%20it%20all%20comes%20down%20to%20trust.&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> The last thing is it depends on what you’re lending on. If we’re talking about single-family residential, lending to owner-occupied is different from lending to non-owner occupied. When it’s non-owner occupied, generally you’re lending to some LLC. There is a business entity. They’re a business bank account. The person is not supposed to live in it. There is a language in the actual loan documents that say, “This is a business purpose loan. I won’t use any of this for personal or household expenses.” Contrast that with when you’re lending in the owner-occupied context, suddenly that becomes a consumer loan. It’s not a commercial loan and that is very heavily regulated. I do a lot of loans to people who do seller financing. It’s Dodd-Frank. There are lots of hoops we go through. We have it originated and there’s the test to make sure that that person can pay the mortgage and you’re not dodging them. You said it perfectly, once it becomes a consumer loan, then the regulators and the judges are not going to look favorably upon you. I don’t care if it is out of your Roth IRA. If you’re doing something wrong, they’re going to get you. Not only that, it’s not just a whole different set of rules, but a different philosophy or mentality applies. If you’re lending to non-owner occupied, people are like, “It’s a business loan. It’s all for business.” You’re presumed to be sophisticated and all that stuff. When you’re doing a consumer loan and you end up going to court or something like that, then suddenly it’s not like, “A business loan deal went south.” It is, “You’re kicking someone out of their home.” It’s suddenly a much bigger deal. The states where they tend to be blue states or places where it’s a large metropolitan area, the judges in those jurisdictions are going to scrutinize this a lot more in favor of the borrower than the lenders. Be aware of all of that. I tell people who want to be private lenders is to don’t go owner-occupied, not until you get a lot of experience and you get a legal team built behind you that can handle all this for you. The lawyers are there for their help. They’re there to keep us compliant and also to say, “I see you put this language in here, this can happen,” or “This is your worst-case scenario. Why don’t you try this?” It’s funny you mentioned usury laws because Quincy Long at <a href="https://www.questtrustcompany.com/" rel="noopener external noreferrer nofollow" target="_blank">Quest IRA</a> always says, “What’s a little usury amongst friends? We all know each other here.” The way I understand it is there are no usury police out there. However, in Texas, 18% is our usury law. Let’s say I make a loan for 20% and I anger that borrower somehow, in some way. That borrower can go to court, take it to a judge and the judge says, “This is a usurious contract. It’s null and void and you don’t even have to pay that guy back his money.” It’s not exactly the same, but I liken it to landlord-tenant law. There are many places where just because the tenant complains, everyone bends over backward for a tenant as opposed to the landlord. It sucks, it’s business and you don’t want to be in that situation. From a securities perspective on the federal level, everyone’s got to check your own state. It would be worthwhile saying we’re not offering to sell any securities or anything like that. This does not constitute an attorney-client contract with you or anybody else. From the federal level, as long as a lender is making it person to person, it’s a business loan from me to a real estate investor to do a flip or a landlord wants to hold it for three years or whatever. There’s very little regulation on that. There may be some. Check with your state. From the federal level, the SEC, they’re pretty cool with it. The SEC doesn’t deal with this whole lot, except to the extent that you get multiple investors involved. This tends to be on a very state level and it tends to be a very commercial discussion. The other big issue is licensing. Do you need a license to be making these loans, to be brokering them? That’s a state by state discussion. In most states, for non-owner occupied lending, you usually don’t need a license. There’s a handful of states where you do. There are several states that offer several different types of licensure. You could be a regular real estate broker, you can be a mortgage broker, you can be a loan broker or things of that sort. It’s a state by state discussion. I do actually like that. The feds are like, “We’re going to make sure that you’re not taking advantage of anybody and then we’ll let everything else fall to the state.” You talked about brokering. I wanted to bring that up because in Texas, we’re a red state, but we’re pretty liberal when it comes to things like oilfields and guns. We’re awesome. We have a very short foreclosure process. I love to lend here. I’ll give you a scenario of maybe something I’ve thought about doing here, or maybe it’s something I’ve done. Let’s say that I find a deal, but I’ve already tapped out all my money out of my self-directed IRA and I don’t have any cash. I negotiate a loan to an investor and then I have somebody else fund it. Can I get a couple of points? Can they get the points off of the loan at closing or would I be considered a broker in the eyes of the feds? The feds don’t care, but your state regulators are going to care. That’s one of those situations where you are going to have to figure out whether you need a loan brokering or a mortgage brokering license from your specific state. We don’t have security in Texas until you get 30 people. It leads me to my next question. I want to get in your expertise because I don’t want to let you go and listen. Let’s say I’m making this step up. I’m going from my single-family. I’m an investor now, not just a private lender, but I want to become an active investor. I’m not going to go run out and sponsor syndication for a 200-unit apartment complex. As someone who is a single-family investor and lender, walk us through. A friend of mine is going to sponsor this deal. He’s putting it all together. He’s getting legal. He’s got his memorandum together and everything. Walk us through what you would suggest I look for as I go through my first syndication. Private Lending: When one person’s making a loan to another person, it is just a straight up loan. When we get ten investors to invest in a fund and make a lot of private loans to flippers, that’s security. The first thing I’ll mention is that notes or debt instruments can be considered a security. When I said when one person’s making a loan to another person, that’s not a security, that’s just a straight up loan. When we get into fancier things where it’s like, “I’m going to get ten investors to invest in a fund which is going to make a lot of private loans to flippers or something like that,” suddenly, that’s security. In terms of what is and is not a security, there’s a very well-defined test on that. It’s called the Howey Test and it’s named after a dude named Howey. It’s a four-part test. What people are looking for to figure out whether or not you’re selling security is generally there’s an investment of money. It’s a common enterprise of people. It’s not one person to one person, but a group of people. The folks who are putting their money in are expecting some profit or possibly a loss. Lastly and very importantly is that it’s based off the efforts of another or a third party. What that means is if you have all active investors, if you have some investor club where everyone says, “We’re all going to source deals together and whoever finds a good deal, we might all invest in it.” That’s not a security because it’s more like an educational group. If it’s something like, “I’m due diligencing all these deals that come in through the pipeline. I’ve determined that this one’s good. I may be putting some of my money in it or I don’t have to, but you guys are all going to invest money. I’m going to organize everything, package it all together and make the loan. I would do all the investor relations, all of that and check foreclosure. You guys don’t have to be involved. I will take care of that. Whatever profits come back, I’m going to distribute them to you.” Instead of an active investor situation, you’ve got a passive investor situation. There’s one person or a couple of people who are part of the sponsoring team where they’re handling the day-to-day operations. All the people who are putting the money in, they are passive. They don’t want to deal with it. They are paying you to deal with it. You’re looking at situations where it’s the doctor that’s investing or the dentist who’s investing. They don’t want to be active investors themselves. They just want to invest money somewhere and then hopefully it makes them money. That’s when we’re talking about securities laws. Securities in the private lending context, it comes in a couple of different forms. The most popular form I see is someone wants to start some fund that makes hard money or private money loans all day long. They...

PLP-066 Private Lending And The SEC with Attorney Amy Wan

Chris Funk

WHAT YOU’LL LEARN ON EPISODE 003: How to evaluate property condition and “as is” value How to analyze and fine tune comparable sales (comps) How to find comps without MLS access The biggest value mistake both lenders and borrowers are making in the current market How flexibility and being easy to deal with can benefit the lender Sage advice from one of the Houston area’s heavy hitting real estate investors And so much more!!   Who is Chris Funk? Contact:   Facebook.com/funkmadelic Chris Funk is a 36 year old real estate investor from Houston, TX. He dropped out of college at the age of 23 and began working hands on in the construction industry renovating homes for clients who were investors and landlords to learn the renovation business from the inside out with the ultimate goal of owning enough real estate that he could quit his job for good.   Chris had the dream of becoming a landlord and set out to learn wholesaling as a strategy to find good deals he could eventually hold as rentals. Chris networked at the local real estate clubs and made friends with some of the top local area wholesalers but was for the most part self-taught.   In 2010 Chris Joined the Houston Apartment Association (HAA) and earned the Certified Apartment Manager, Certified Apartment Portfolio Supervisor, and Independent Rental Owner Professional (CAM, CAPS, &amp; IROP) Designations. Having the goal of owning a rental real estate portfolio Chris wanted to know as much about operating investment properties at his employee’s that he would eventually hire.   With a solid foundation laid, learning to renovate homes from the ground up, taking classes at HAA and finding below market deals as a wholesaler, Chris made contacts with several seasoned investors who owned rental properties and formed partnerships to take down the deals he was finding and keep them in house with his partners rather than wholesaling them to outside investors. Chris had the great deals and the renovation experience, and the partners had the money and the credit.   Fast forward, 6 years later, Chris owned 92 rental units at the age of 29 he officially was “retired” with enough rental income to live comfortably. He has done wholesale, owner finance, rehab flips, single family rentals and apartment complexes. He currently owns 115 units consisting of 2 apartment complexes, 2 four-plexes, 1 six-plex, and 9 single family rent houses and several owner financed notes.   Chris still operates a full time property management business and a full time wholesaling business with 3 full time employees and 1 part time employee. The majority of the properties he puts under contract now are acquired with private money or bank lines and then sold with owner financing or held as rentals.   Chris has been honored as a guest speaker at MyHouseDeals.com, Lifestyles Unlimited, Rich Club, Wealth Club, various podcasts, and several live radio shows over the years. Chris currently teaches real estate investing at Su-Casa University. 

WHAT <a href="http://privatelenderpodcast.com/wp-content/uploads/2018/01/Funk-Foto.jpg" rel="nofollow" target="_blank"></a>YOU’LL LEARN ON EPISODE 003: How to evaluate property condition and “as is” value How to analyze and fine tune comparable sales (comps) How to find comps without MLS access The biggest value mistake both lenders and borrowers are making in the current market How flexibility and being easy to deal with can benefit the lender Sage advice from one of the Houston area’s heavy hitting real estate investors And so much more!! Who is Chris Funk? Contact:   <a href="http://Facebook.com/funkmadelic" rel="nofollow" target="_blank">Facebook.com/funkmadelic</a> Chris Funk is a 36 year old real estate investor from Houston, TX. He dropped out of college at the age of 23 and began working hands on in the construction industry renovating homes for clients who were investors and landlords to learn the renovation business from the inside out with the ultimate goal of owning enough real estate that he could quit his job for good. Chris had the dream of becoming a landlord and set out to learn wholesaling as a strategy to find good deals he could eventually hold as rentals. Chris networked at the local real estate clubs and made friends with some of the top local area wholesalers but was for the most part self-taught. In 2010 Chris Joined the Houston Apartment Association (HAA) and earned the Certified Apartment Manager, Certified Apartment Portfolio Supervisor, and Independent Rental Owner Professional (CAM, CAPS, &amp; IROP) Designations. Having the goal of owning a rental real estate portfolio Chris wanted to know as much about operating investment properties at his employee’s that he would eventually hire. With a solid foundation laid, learning to renovate homes from the ground up, taking classes at HAA and finding below market deals as a wholesaler, Chris made contacts with several seasoned investors who owned rental properties and formed partnerships to take down the deals he was finding and keep them in house with his partners rather than wholesaling them to outside investors. Chris had the great deals and the renovation experience, and the partners had the money and the credit. Fast forward, 6 years later, Chris owned 92 rental units at the age of 29 he officially was “retired” with enough rental income to live comfortably. He has done wholesale, owner finance, rehab flips, single family rentals and apartment complexes. He currently owns 115 units consisting of 2 apartment complexes, 2 four-plexes, 1 six-plex, and 9 single family rent houses and several owner financed notes. Chris still operates a full time property management business and a full time wholesaling business with 3 full time employees and 1 part time employee. The majority of the properties he puts under contract now are acquired with private money or bank lines and then sold with owner financing or held as rentals. Chris has been honored as a guest speaker at <a href="http://MyHouseDeals.com" rel="nofollow" target="_blank">MyHouseDeals.com</a>, Lifestyles Unlimited, Rich Club, Wealth Club, various podcasts, and several live radio shows over the years. Chris currently teaches real estate investing at Su-Casa University.

PLP-003  Determining Value for Lenders and Investors with Chris Funk (part 1)

Michael Plaks

How do the new tax laws affect Private Lenders?  – IT DEPENDS!!  Listen as Michael Plaks explains: -How the new tax laws can affect Private Lenders and the profits they receive from the interest on their loans. -What investment vehicle is practically custom designed for Private Lending -Learn about changes to Self-Directed IRAs. Michael has been helping Real Estate Investors and Private Lenders save $$$$ from their tax bill for over 2 decade, and he can help you save as well. To find out more about the special offer only for Private Lender Podcast listeners that Michael has graciously provided, visit reitaxfirm.com/plp Many thanks Michael!     And please be sure to visit and donate to The Texas 100 

How do the new tax laws affect Private Lenders?  – IT DEPENDS!! <a href="http://privatelenderpodcast.com/wp-content/uploads/2018/03/M-Plaks.jpg" rel="nofollow" target="_blank"></a> Listen as Michael Plaks explains: -How the new tax laws can affect Private Lenders and the profits they receive from the interest on their loans. -What investment vehicle is practically custom designed for Private Lending -Learn about changes to Self-Directed IRAs. Michael has been helping Real Estate Investors and Private Lenders save $$$$ from their tax bill for over 2 decade, and he can help you save as well. To find out more about the special offer only for Private Lender Podcast listeners that Michael has graciously provided, visit <a href="http://www.reitaxfirm.com/plp" rel="noopener external noreferrer nofollow" target="_blank">reitaxfirm.com/plp</a> Many thanks Michael! And please be sure to visit and donate to <a href="http://www.texas100.com" rel="noopener external noreferrer nofollow" target="_blank">The Texas 100 </a>

PLP-013  Effects of new tax laws on Private Lenders with Michael Plaks

Landon Rothstein

Landon Rothstein began real estate investing by using conventional bank loans.  But he quickly found after the fourth loan the banks would no longer loan to him.  That’s when Landon began utilizing loans from private lenders to amass a portfolio of well over 80 rentals and owner financed notes.  He now enjoys the lifestyle of a full-time real estate investor, and has teamed up with some amazing partners. Landon has teamed up with Houston area REI heavy hitter Ray Sasser.  Together they host one of the fastest growing real estate Meetups in Houston.   Contact Landon: 281-852-7777 mobile/text  or via email at:    landon@sellerfinanceme.com Visit with Landon at:  713 Real Estate Networking w/ Landon and Ray Sasser       Please visit 

Landon Rothstein began real estate investing by using conventional bank loans.  But he quickly found after the fourth loan the banks would no longer loan to him.  That’s when Landon began utilizing loans from private lenders to amass a portfolio of well over 80 rentals and owner financed notes.  He now enjoys the lifestyle of a full-time real estate investor, and has teamed up with some amazing partners. Landon has teamed up with Houston area REI heavy hitter Ray Sasser.  Together they host one of the fastest growing real estate <a href="https://www.meetup.com/713-Houston-Area-Real-Estate-Investor-Network/events/248251169/" rel="noopener external noreferrer nofollow" target="_blank">Meetups</a> in Houston. Contact Landon: 281-852-7777 mobile/text  or via email at:    <a href="mailto:landon@sellerfinanceme.com">landon@sellerfinanceme.com</a> Visit with Landon at:  <a href="https://www.meetup.com/713-Houston-Area-Real-Estate-Investor-Network/events/248593599/" rel="noopener external noreferrer nofollow" target="_blank">713 Real Estate Networking w/ Landon and Ray Sasser</a> Please visit <a href="http://www.texas100.org/" rel="noopener external noreferrer nofollow" target="_blank"></a>

PLP-014  The transition away from banks to Private Lenders with Landon Rothstein

Not all are mindful of the laws that go along with private lending since some lenders base their transaction on relationships and trust. Although it all boils down to trust, being well-informed of the legal aspects of private lending will not harm anyone. In today’s time, there is a practical reality that people trying to raise a small amount of capital have limited ability to be compliant with securities laws, and this is what Attorney Amy Wan delves into. Founder and CEO of Bootstrap Legal, Amy breaks down the types of rules, regulations, and securities in private lending. As she explains when an investment loan becomes security, Amy reveals that lenders are much less regulated when you lend your own money to another investor. She goes in-depth on the event when you need to have a license when making loans, the legal documents required with investors, the process she does that make legal matters and paperwork less stressful to clients, and how she has brought digital and legal to smaller investors. On the side, she shares details about her podcast show, Law and Blockchain. — Listen to the podcast here: Private Lending And The SEC with Attorney Amy Wan Syndicating, Private Lending And SEC Compliance I’d like to welcome you to this episode. I’m very grateful to have the pleasure of speaking with an attorney who happens to specialize in helping investors handling the paperwork and the filings required by the SEC, Securities Exchange Commission. My guest, Amy Wan, has an impressive resume to say the least. She lives on the leading edge of the financial and legal tech world and was named one of the Ten Women to Watch in Legal Tech by the ABA Journal, that’s the American Bar Association. I’m honored and grateful to have her on the show. I have a new slogan that I actually put on a Private Lender Podcast t-shirt. The back says, “Never trust, always verify.” Nonetheless, never trust, always verify is a perfect segue into an interview with an SEC attorney. Let’s go ahead and get down to the brass tacks and let’s get to the interview with Amy Wan. — I’ve got a special treat for you. Our guest is Amy Wan, Founder and CEO of Bootstrap Legal. I am excited to have her on the show. Amy, welcome to the show. Thank you for having me. Thank you for coming out and being interviewed. You deal in an area of expertise of the law that’s beyond my scope of understanding. You’re bringing it down to where people like me can participate, and I definitely want to get into that part of it. I promise we’ll keep this about 30,000 feet as much as possible and we’ll drill down when we need to because I know the law. You can go down some rabbit holes. Tell us a little bit about yourself and how you became the securities and syndication guru that you are. I actually started my career in the federal government. We were doing interesting things in DC, international trade and international regulatory affairs. When I moved back to LA, there’s not much of an international trade law industry out in LA except for import-export compliance paperwork which was very different from negotiating free trade agreements. I started over. I became general counsel of an early stage real estate crowdfunding platform at that time. The interesting thing about that crowdfunding platform is that I had to deal with two different areas of law, one on the real estate lending side and then one on the actual security side. We did private lending. We would make hard money, private money loans to folks flipping houses and then we would fractionalize those loans and turn it into a security and sell it to accredited investors through our marketplace. I spent a couple of years there and I learned the ins and outs of both of those different sides of the industry. I went on to become a partner at a boutique law firm that focused pretty much exclusively on a real estate syndication, more so the equity side and then it got interesting. I got to a point in my practice where I was spending every day writing the same fund documents over and over again. I thought this is inefficient. I befriended someone who was beginning in the syndication industry at the time. He’s now a large real estate syndication influencer. Back then, he came to me and said, “I want to raise $300,000 through syndication. How much will it cost?” I told him, “I’ll tell you the price. I know you’re not going to use me because the transaction cost doesn’t make sense.” Sure enough, I told him the price. He fled the other direction and I thought, “This is interesting. Folks trying to raise a small amount of capital have very limited ability to actually be compliant with securities laws.” The SEC doesn’t care about that. I had dinner with a couple of folks from the SEC. I brought this up to them and they were like, “You still have to follow all of the securities laws anyway. I’m like, “I get that, but there’s this practical reality.” Given that I had worked at a tech startup, I thought I could do better. I whipped up some software. It’s like the TurboTax of real estate syndication and it actually automates the first draft of a lot of the paperwork that you need to sell a security. For me as an attorney, it’s great because I cut off twenty hours off of drafting, but it’s great for my clients because I can get them the documents faster. My prices tend to be a little bit lower because I’m so much more efficient. I’m not one of those attorneys who bills by the hour. I do flat fees and it makes so much more sense. I heard you first on Kevin Bupp’s podcast a while ago. I was commuting to work and I was thinking, “I’ve got to get Amy on to talk about this. A lot of our audience will call or email and they’ll talk about the security side of things, the SEC and what investors or borrowers would have to do.” As I understand is that they issue the certificates or they issue the security. The SEC is concerned with them. On the private lending side, what type of rules and regulations do we have? I’ll back it up. Let’s look at it from, “I’m going to make a loan on the single-family house versus my best friend is going to get into an apartment complex and he’s syndicating twenty people together to get the equity stake so that we can go get the funds.” From a federal perspective, how do the investors and the lenders look? When it comes to lending law itself, although there are some federal regulations and laws around lending generally, most of those are in the consumer context. When it comes to private money, a lot of this is done from a state regulation perspective. When you get into state lending laws, it varies state by state. Some states require you to have a license to do this. Some states don’t care. Some states, for example California, you can make a small number of loans and then after you reached that limit, then you have to have that license. There are different types of licenses you need. It’s all over the map. Generally, there are a couple of things that folks should keep in mind. One of these things is usury rates. A loan that is usurious is when you’re charging too much for interest. Every state has a different usury rate. You generally do not want to go over it because the states and the regulators do not take kindly upon that, although in this market, it’s not much of a problem because the rates are significantly lower than they were a couple of years ago. Usury is one. Another thing to keep in mind is securities. If it’s one person lending to another person, that’s usually fine. When it’s multiple people banding together to lend to one person or even multiple people, then we have to think about a different set of laws. That’s securities laws. At the end of the day, it all comes down to trust.Click To Tweet The last thing is it depends on what you’re lending on. If we’re talking about single-family residential, lending to owner-occupied is different from lending to non-owner occupied. When it’s non-owner occupied, generally you’re lending to some LLC. There is a business entity. They’re a business bank account. The person is not supposed to live in it. There is a language in the actual loan documents that say, “This is a business purpose loan. I won’t use any of this for personal or household expenses.” Contrast that with when you’re lending in the owner-occupied context, suddenly that becomes a consumer loan. It’s not a commercial loan and that is very heavily regulated. I do a lot of loans to people who do seller financing. It’s Dodd-Frank. There are lots of hoops we go through. We have it originated and there’s the test to make sure that that person can pay the mortgage and you’re not dodging them. You said it perfectly, once it becomes a consumer loan, then the regulators and the judges are not going to look favorably upon you. I don’t care if it is out of your Roth IRA. If you’re doing something wrong, they’re going to get you. Not only that, it’s not just a whole different set of rules, but a different philosophy or mentality applies. If you’re lending to non-owner occupied, people are like, “It’s a business loan. It’s all for business.” You’re presumed to be sophisticated and all that stuff. When you’re doing a consumer loan and you end up going to court or something like that, then suddenly it’s not like, “A business loan deal went south.” It is, “You’re kicking someone out of their home.” It’s suddenly a much bigger deal. The states where they tend to be blue states or places where it’s a large metropolitan area, the judges in those jurisdictions are going to scrutinize this a lot more in favor of the borrower than the lenders. Be aware of all of that. I tell people who want to be private lenders is to don’t go owner-occupied, not until you get a lot of experience and you get a legal team built behind you that can handle all this for you. The lawyers are there for their help. They’re there to keep us compliant and also to say, “I see you put this language in here, this can happen,” or “This is your worst-case scenario. Why don’t you try this?” It’s funny you mentioned usury laws because Quincy Long at Quest IRA always says, “What’s a little usury amongst friends? We all know each other here.” The way I understand it is there are no usury police out there. However, in Texas, 18% is our usury law. Let’s say I make a loan for 20% and I anger that borrower somehow, in some way. That borrower can go to court, take it to a judge and the judge says, “This is a usurious contract. It’s null and void and you don’t even have to pay that guy back his money.” It’s not exactly the same, but I liken it to landlord-tenant law. There are many places where just because the tenant complains, everyone bends over backward for a tenant as opposed to the landlord. It sucks, it’s business and you don’t want to be in that situation. From a securities perspective on the federal level, everyone’s got to check your own state. It would be worthwhile saying we’re not offering to sell any securities or anything like that. This does not constitute an attorney-client contract with you or anybody else. From the federal level, as long as a lender is making it person to person, it’s a business loan from me to a real estate investor to do a flip or a landlord wants to hold it for three years or whatever. There’s very little regulation on that. There may be some. Check with your state. From the federal level, the SEC, they’re pretty cool with it. The SEC doesn’t deal with this whole lot, except to the extent that you get multiple investors involved. This tends to be on a very state level and it tends to be a very commercial discussion. The other big issue is licensing. Do you need a license to be making these loans, to be brokering them? That’s a state by state discussion. In most states, for non-owner occupied lending, you usually don’t need a license. There’s a handful of states where you do. There are several states that offer several different types of licensure. You could be a regular real estate broker, you can be a mortgage broker, you can be a loan broker or things of that sort. It’s a state by state discussion. I do actually like that. The feds are like, “We’re going to make sure that you’re not taking advantage of anybody and then we’ll let everything else fall to the state.” You talked about brokering. I wanted to bring that up because in Texas, we’re a red state, but we’re pretty liberal when it comes to things like oilfields and guns. We’re awesome. We have a very short foreclosure process. I love to lend here. I’ll give you a scenario of maybe something I’ve thought about doing here, or maybe it’s something I’ve done. Let’s say that I find a deal, but I’ve already tapped out all my money out of my self-directed IRA and I don’t have any cash. I negotiate a loan to an investor and then I have somebody else fund it. Can I get a couple of points? Can they get the points off of the loan at closing or would I be considered a broker in the eyes of the feds? The feds don’t care, but your state regulators are going to care. That’s one of those situations where you are going to have to figure out whether you need a loan brokering or a mortgage brokering license from your specific state. We don’t have security in Texas until you get 30 people. It leads me to my next question. I want to get in your expertise because I don’t want to let you go and listen. Let’s say I’m making this step up. I’m going from my single-family. I’m an investor now, not just a private lender, but I want to become an active investor. I’m not going to go run out and sponsor syndication for a 200-unit apartment complex. As someone who is a single-family investor and lender, walk us through. A friend of mine is going to sponsor this deal. He’s putting it all together. He’s getting legal. He’s got his memorandum together and everything. Walk us through what you would suggest I look for as I go through my first syndication. Private Lending: When one person’s making a loan to another person, it is just a straight up loan. When we get ten investors to invest in a fund and make a lot of private loans to flippers, that’s security.   The first thing I’ll mention is that notes or debt instruments can be considered a security. When I said when one person’s making a loan to another person, that’s not a security, that’s just a straight up loan. When we get into fancier things where it’s like, “I’m going to get ten investors to invest in a fund which is going to make a lot of private loans to flippers or something like that,” suddenly, that’s security. In terms of what is and is not a security, there’s a very well-defined test on that. It’s called the Howey Test and it’s named after a dude named Howey. It’s a four-part test. What people are looking for to figure out whether or not you’re selling security is generally there’s an investment of money. It’s a common enterprise of people. It’s not one person to one person, but a group of people. The folks who are putting their money in are expecting some profit or possibly a loss. Lastly and very importantly is that it’s based off the efforts of another or a third party. What that means is if you have all active investors, if you have some investor club where everyone says, “We’re all going to source deals together and whoever finds a good deal, we might all invest in it.” That’s not a security because it’s more like an educational group. If it’s something like, “I’m due diligencing all these deals that come in through the pipeline. I’ve determined that this one’s good. I may be putting some of my money in it or I don’t have to, but you guys are all going to invest money. I’m going to organize everything, package it all together and make the loan. I would do all the investor relations, all of that and check foreclosure. You guys don’t have to be involved. I will take care of that. Whatever profits come back, I’m going to distribute them to you.” Instead of an active investor situation, you’ve got a passive investor situation. There’s one person or a couple of people who are part of the sponsoring team where they’re handling the day-to-day operations. All the people who are putting the money in, they are passive. They don’t want to deal with it. They are paying you to deal with it. You’re looking at situations where it’s the doctor that’s investing or the dentist who’s investing. They don’t want to be active investors themselves. They just want to invest money somewhere and then hopefully it makes them money. That’s when we’re talking about securities laws. Securities in the private lending context, it comes in a couple of different forms. The most popular form I see is someone wants to start some fund that makes hard money or private money loans all day long. They

Not all are mindful of the laws that go along with private lending since some lenders base their transaction on relationships and trust. Although it all boils down to trust, being well-informed of the legal aspects of private lending will not harm anyone. In today’s time, there is a practical reality that people trying to raise a small amount of capital have limited ability to be compliant with securities laws, and this is what Attorney Amy Wan delves into. Founder and CEO of Bootstrap Legal, Amy breaks down the types of rules, regulations, and securities in private lending. As she explains when an investment loan becomes security, Amy reveals that lenders are much less regulated when you lend your own money to another investor. She goes in-depth on the event when you need to have a license when making loans, the legal documents required with investors, the process she does that make legal matters and paperwork less stressful to clients, and how she has brought digital and legal to smaller investors. On the side, she shares details about her podcast show, Law and Blockchain. — <h3>Listen to the podcast here:</h3> <h2>Private Lending And The SEC with Attorney Amy Wan</h2> <h3>Syndicating, Private Lending And SEC Compliance</h3> I’d like to welcome you to this episode. I’m very grateful to have the pleasure of speaking with an attorney who happens to specialize in helping investors handling the paperwork and the filings required by the SEC, Securities Exchange Commission. My guest, <a href="http://www.amywanlaw.com/" rel="noopener external noreferrer nofollow" target="_blank">Amy Wan</a>, has an impressive resume to say the least. She lives on the leading edge of the financial and legal tech world and was named one of the Ten Women to Watch in Legal Tech by the ABA Journal, that’s the American Bar Association. I’m honored and grateful to have her on the show. I have a new slogan that I actually put on a Private Lender Podcast t-shirt. The back says, “Never trust, always verify.” Nonetheless, never trust, always verify is a perfect segue into an interview with an SEC attorney. Let’s go ahead and get down to the brass tacks and let’s get to the interview with Amy Wan. — I’ve got a special treat for you. Our guest is Amy Wan, Founder and CEO of <a href="https://www.bootstraplegal.com/" rel="noopener external noreferrer nofollow" target="_blank">Bootstrap Legal</a>. I am excited to have her on the show. Amy, welcome to the show. Thank you for having me. Thank you for coming out and being interviewed. You deal in an area of expertise of the law that’s beyond my scope of understanding. You’re bringing it down to where people like me can participate, and I definitely want to get into that part of it. I promise we’ll keep this about 30,000 feet as much as possible and we’ll drill down when we need to because I know the law. You can go down some rabbit holes. Tell us a little bit about yourself and how you became the securities and syndication guru that you are. I actually started my career in the federal government. We were doing interesting things in DC, international trade and international regulatory affairs. When I moved back to LA, there’s not much of an international trade law industry out in LA except for import-export compliance paperwork which was very different from negotiating free trade agreements. I started over. I became general counsel of an early stage real estate crowdfunding platform at that time. The interesting thing about that crowdfunding platform is that I had to deal with two different areas of law, one on the real estate lending side and then one on the actual security side. We did private lending. We would make hard money, private money loans to folks flipping houses and then we would fractionalize those loans and turn it into a security and sell it to accredited investors through our marketplace. I spent a couple of years there and I learned the ins and outs of both of those different sides of the industry. I went on to become a partner at a boutique law firm that focused pretty much exclusively on a real estate syndication, more so the equity side and then it got interesting. I got to a point in my practice where I was spending every day writing the same fund documents over and over again. I thought this is inefficient. I befriended someone who was beginning in the syndication industry at the time. He’s now a large real estate syndication influencer. Back then, he came to me and said, “I want to raise $300,000 through syndication. How much will it cost?” I told him, “I’ll tell you the price. I know you’re not going to use me because the transaction cost doesn’t make sense.” Sure enough, I told him the price. He fled the other direction and I thought, “This is interesting. Folks trying to raise a small amount of capital have very limited ability to actually be compliant with securities laws.” The SEC doesn’t care about that. I had dinner with a couple of folks from the SEC. I brought this up to them and they were like, “You still have to follow all of the securities laws anyway. I’m like, “I get that, but there’s this practical reality.” Given that I had worked at a tech startup, I thought I could do better. I whipped up some software. It’s like the TurboTax of real estate syndication and it actually automates the first draft of a lot of the paperwork that you need to sell a security. For me as an attorney, it’s great because I cut off twenty hours off of drafting, but it’s great for my clients because I can get them the documents faster. My prices tend to be a little bit lower because I’m so much more efficient. I’m not one of those attorneys who bills by the hour. I do flat fees and it makes so much more sense. I heard you first on Kevin Bupp’s podcast a while ago. I was commuting to work and I was thinking, “I’ve got to get Amy on to talk about this. A lot of our audience will call or email and they’ll talk about the security side of things, the SEC and what investors or borrowers would have to do.” As I understand is that they issue the certificates or they issue the security. The SEC is concerned with them. On the private lending side, what type of rules and regulations do we have? I’ll back it up. Let’s look at it from, “I’m going to make a loan on the single-family house versus my best friend is going to get into an apartment complex and he’s syndicating twenty people together to get the equity stake so that we can go get the funds.” From a federal perspective, how do the investors and the lenders look? When it comes to lending law itself, although there are some federal regulations and laws around lending generally, most of those are in the consumer context. When it comes to private money, a lot of this is done from a state regulation perspective. When you get into state lending laws, it varies state by state. Some states require you to have a license to do this. Some states don’t care. Some states, for example California, you can make a small number of loans and then after you reached that limit, then you have to have that license. There are different types of licenses you need. It’s all over the map. Generally, there are a couple of things that folks should keep in mind. One of these things is usury rates. A loan that is usurious is when you’re charging too much for interest. Every state has a different usury rate. You generally do not want to go over it because the states and the regulators do not take kindly upon that, although in this market, it’s not much of a problem because the rates are significantly lower than they were a couple of years ago. Usury is one. Another thing to keep in mind is securities. If it’s one person lending to another person, that’s usually fine. When it’s multiple people banding together to lend to one person or even multiple people, then we have to think about a different set of laws. That’s securities laws. At the end of the day, it all comes down to trust. <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/bestof66/&amp;text=At%20the%20end%20of%20the%20day%2C%20it%20all%20comes%20down%20to%20trust.&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> The last thing is it depends on what you’re lending on. If we’re talking about single-family residential, lending to owner-occupied is different from lending to non-owner occupied. When it’s non-owner occupied, generally you’re lending to some LLC. There is a business entity. They’re a business bank account. The person is not supposed to live in it. There is a language in the actual loan documents that say, “This is a business purpose loan. I won’t use any of this for personal or household expenses.” Contrast that with when you’re lending in the owner-occupied context, suddenly that becomes a consumer loan. It’s not a commercial loan and that is very heavily regulated. I do a lot of loans to people who do seller financing. It’s Dodd-Frank. There are lots of hoops we go through. We have it originated and there’s the test to make sure that that person can pay the mortgage and you’re not dodging them. You said it perfectly, once it becomes a consumer loan, then the regulators and the judges are not going to look favorably upon you. I don’t care if it is out of your Roth IRA. If you’re doing something wrong, they’re going to get you. Not only that, it’s not just a whole different set of rules, but a different philosophy or mentality applies. If you’re lending to non-owner occupied, people are like, “It’s a business loan. It’s all for business.” You’re presumed to be sophisticated and all that stuff. When you’re doing a consumer loan and you end up going to court or something like that, then suddenly it’s not like, “A business loan deal went south.” It is, “You’re kicking someone out of their home.” It’s suddenly a much bigger deal. The states where they tend to be blue states or places where it’s a large metropolitan area, the judges in those jurisdictions are going to scrutinize this a lot more in favor of the borrower than the lenders. Be aware of all of that. I tell people who want to be private lenders is to don’t go owner-occupied, not until you get a lot of experience and you get a legal team built behind you that can handle all this for you. The lawyers are there for their help. They’re there to keep us compliant and also to say, “I see you put this language in here, this can happen,” or “This is your worst-case scenario. Why don’t you try this?” It’s funny you mentioned usury laws because Quincy Long at <a href="https://www.questtrustcompany.com/" rel="noopener external noreferrer nofollow" target="_blank">Quest IRA</a> always says, “What’s a little usury amongst friends? We all know each other here.” The way I understand it is there are no usury police out there. However, in Texas, 18% is our usury law. Let’s say I make a loan for 20% and I anger that borrower somehow, in some way. That borrower can go to court, take it to a judge and the judge says, “This is a usurious contract. It’s null and void and you don’t even have to pay that guy back his money.” It’s not exactly the same, but I liken it to landlord-tenant law. There are many places where just because the tenant complains, everyone bends over backward for a tenant as opposed to the landlord. It sucks, it’s business and you don’t want to be in that situation. From a securities perspective on the federal level, everyone’s got to check your own state. It would be worthwhile saying we’re not offering to sell any securities or anything like that. This does not constitute an attorney-client contract with you or anybody else. From the federal level, as long as a lender is making it person to person, it’s a business loan from me to a real estate investor to do a flip or a landlord wants to hold it for three years or whatever. There’s very little regulation on that. There may be some. Check with your state. From the federal level, the SEC, they’re pretty cool with it. The SEC doesn’t deal with this whole lot, except to the extent that you get multiple investors involved. This tends to be on a very state level and it tends to be a very commercial discussion. The other big issue is licensing. Do you need a license to be making these loans, to be brokering them? That’s a state by state discussion. In most states, for non-owner occupied lending, you usually don’t need a license. There’s a handful of states where you do. There are several states that offer several different types of licensure. You could be a regular real estate broker, you can be a mortgage broker, you can be a loan broker or things of that sort. It’s a state by state discussion. I do actually like that. The feds are like, “We’re going to make sure that you’re not taking advantage of anybody and then we’ll let everything else fall to the state.” You talked about brokering. I wanted to bring that up because in Texas, we’re a red state, but we’re pretty liberal when it comes to things like oilfields and guns. We’re awesome. We have a very short foreclosure process. I love to lend here. I’ll give you a scenario of maybe something I’ve thought about doing here, or maybe it’s something I’ve done. Let’s say that I find a deal, but I’ve already tapped out all my money out of my self-directed IRA and I don’t have any cash. I negotiate a loan to an investor and then I have somebody else fund it. Can I get a couple of points? Can they get the points off of the loan at closing or would I be considered a broker in the eyes of the feds? The feds don’t care, but your state regulators are going to care. That’s one of those situations where you are going to have to figure out whether you need a loan brokering or a mortgage brokering license from your specific state. We don’t have security in Texas until you get 30 people. It leads me to my next question. I want to get in your expertise because I don’t want to let you go and listen. Let’s say I’m making this step up. I’m going from my single-family. I’m an investor now, not just a private lender, but I want to become an active investor. I’m not going to go run out and sponsor syndication for a 200-unit apartment complex. As someone who is a single-family investor and lender, walk us through. A friend of mine is going to sponsor this deal. He’s putting it all together. He’s getting legal. He’s got his memorandum together and everything. Walk us through what you would suggest I look for as I go through my first syndication. Private Lending: When one person’s making a loan to another person, it is just a straight up loan. When we get ten investors to invest in a fund and make a lot of private loans to flippers, that’s security. The first thing I’ll mention is that notes or debt instruments can be considered a security. When I said when one person’s making a loan to another person, that’s not a security, that’s just a straight up loan. When we get into fancier things where it’s like, “I’m going to get ten investors to invest in a fund which is going to make a lot of private loans to flippers or something like that,” suddenly, that’s security. In terms of what is and is not a security, there’s a very well-defined test on that. It’s called the Howey Test and it’s named after a dude named Howey. It’s a four-part test. What people are looking for to figure out whether or not you’re selling security is generally there’s an investment of money. It’s a common enterprise of people. It’s not one person to one person, but a group of people. The folks who are putting their money in are expecting some profit or possibly a loss. Lastly and very importantly is that it’s based off the efforts of another or a third party. What that means is if you have all active investors, if you have some investor club where everyone says, “We’re all going to source deals together and whoever finds a good deal, we might all invest in it.” That’s not a security because it’s more like an educational group. If it’s something like, “I’m due diligencing all these deals that come in through the pipeline. I’ve determined that this one’s good. I may be putting some of my money in it or I don’t have to, but you guys are all going to invest money. I’m going to organize everything, package it all together and make the loan. I would do all the investor relations, all of that and check foreclosure. You guys don’t have to be involved. I will take care of that. Whatever profits come back, I’m going to distribute them to you.” Instead of an active investor situation, you’ve got a passive investor situation. There’s one person or a couple of people who are part of the sponsoring team where they’re handling the day-to-day operations. All the people who are putting the money in, they are passive. They don’t want to deal with it. They are paying you to deal with it. You’re looking at situations where it’s the doctor that’s investing or the dentist who’s investing. They don’t want to be active investors themselves. They just want to invest money somewhere and then hopefully it makes them money. That’s when we’re talking about securities laws. Securities in the private lending context, it comes in a couple of different forms. The most popular form I see is someone wants to start some fund that makes hard money or private money loans all day long. They

Best Of PLP-066 – Private Lending & the SEC with Attorney Amy Wan

SHOW NOTES: To be continued. . . . .

PLP-034 How to treat a Private Lender/What to demand from your borrowers

How to become a millionaire?  Plant Seeds  Sometimes the simplest of ideas can inspire massive change within an individual. I purchased a CD of this speech a few years ago through SUCCESS magazine, I believe.  I placed it a drawer and forgot about it for a year or two.  After I listened, I knew that something was different – something had changed. I’m not a fan of Rah Rah artists and mentors who provide tons of positive encouragement but really don’t provide actionable tactics and advice, thus my initial skepticism of Shoaff’s method seemed justified:  it seemed as though it were too simple, too easy, and not nearly complicated enough. But Shoaff provides a road map and the small number of  steps one must do to plant their seeds – to achieve their goals.   I like to listen to this speech every so often and replant some seeds. You can find versions of this and several videos of J. Earl Shoaff on YouTube     SPECIAL OFFER!! Get 25% off your Quest IRA Expo tickets with promo code:  BakerExpo Click the image below to purchase your tickets!        Be sure to attend the next meeting of. . . . . . 713 REIA Hosted by Landon Rothstein &amp; Ray Sasser Where Deals Get Done!   Please donate to the Texas 100 and make sure owner finance rights are understood and upheld!   Click the Image/Link Below!!

<h2><a href="https://www.youtube.com/watch?v=wDlEFsiUBV8&amp;t=371s" rel="noopener external noreferrer nofollow" target="_blank">How to become a millionaire?  Plant Seeds</a></h2> <a href="http://privatelenderpodcast.com/wp-content/uploads/2018/08/JES2.jpg" rel="nofollow" target="_blank"></a> Sometimes the simplest of ideas can inspire massive change within an individual. I purchased a CD of this speech a few years ago through SUCCESS magazine, I believe.  I placed it a drawer and forgot about it for a year or two.  After I listened, I knew that something was different – something had changed. I’m not a fan of Rah Rah artists and mentors who provide tons of positive encouragement but really don’t provide actionable tactics and advice, thus my initial skepticism of Shoaff’s method seemed justified:  it seemed as though it were too simple, too easy, and not nearly complicated enough. But Shoaff provides a road map and the small number of  steps one must do to plant their seeds – to achieve their goals.   I like to listen to this speech every so often and replant some seeds. You can find versions of <a href="https://www.youtube.com/watch?v=wDlEFsiUBV8&amp;t=371s" rel="noopener external noreferrer nofollow" target="_blank">this </a>and several videos of J. Earl Shoaff on <a href="https://www.youtube.com/results?search_query=j+earl+shoaff" rel="noopener external noreferrer nofollow" target="_blank">YouTube</a> SPECIAL OFFER!! Get 25% off your Quest IRA Expo tickets with promo code:  <a href="https://questira.lpages.co/quest-expo/" rel="external noopener noreferrer nofollow" target="_blank">BakerExpo</a> Click the image below to purchase your tickets! <a href="https://questira.lpages.co/quest-expo/" rel="noopener external noreferrer nofollow" target="_blank"></a> Be sure to attend the next meeting of. . . . . . <h2><a href="https://www.713reia.com/" rel="noopener external noreferrer nofollow" target="_blank">713 REIA</a></h2> Hosted by Landon Rothstein &amp; Ray Sasser Where Deals Get Done! <h2></h2> <h2></h2> <h2>Please donate to the Texas 100 and make sure owner finance rights are understood and upheld! </h2> Click the Image/Link Below!!

PLP-033 How to become a millionaire

This list of 10 Secrets to Success was originally published in Investor's Business Daily in the early 200's. It has been hidden for years, only found a little while ago in the mess of my office. 1 - How you think is everything:Always be positive. Think success, not failure. Beware of negative environments.2 - Decide upon you true dreams and goals:Write down your specific goals and develop a plan to reach them.3 - TAKE ACTION - NOW!:Goals are nothing without action. Don't be afraid to get started. Just do it.4 - Never stop learning:Go back to school or read books. Get training and acquire skills5 - Be persistent and work hard:Success is a marathon, not a sprint. Never give up.6 - Learn to analyze details:Get all the facts, all the input. Learn from your mistakes.7 - Focus your time and money:Don't let other people or things distract you8 - Don't be afraid to innovate:Following the herd is a sure way to mediocrity9 - Deal and communicate with people effectively:No person is an island. Lean to understand and motivate others10 - Be honest and dependable; Take responsibility:Otherwise, number 1 through 9 won't matter at all  Important Links:Private Lender Podcast on iTunesPrivate Lender Podcast on FacebookPrivate Lender Podcast on InstagramPrivate Lender Podcast on TwitterKeith Baker on LinkedInKeith Baker on BiggerPockets

This list of 10 Secrets to Success was originally published in <a href="https://www.investors.com/" rel="nofollow" target="_blank">Investor's Business Daily</a> in the early 200's. It has been hidden for years, only found a little while ago in the mess of my office. <h4>1 - How you think is everything:</h4><blockquote>Always be positive. Think success, not failure. Beware of negative environments.</blockquote><h4>2 - Decide upon you true dreams and goals:</h4><blockquote>Write down your specific goals and develop a plan to reach them.</blockquote><h4>3 - TAKE ACTION - NOW!:</h4><blockquote>Goals are nothing without action. Don't be afraid to get started. Just do it.</blockquote><h4>4 - Never stop learning:</h4><blockquote>Go back to school or read books. Get training and acquire skills</blockquote><h4>5 - Be persistent and work hard:</h4><blockquote>Success is a marathon, not a sprint. Never give up.</blockquote><h4>6 - Learn to analyze details:</h4><blockquote>Get all the facts, all the input. Learn from your mistakes.</blockquote><h4>7 - Focus your time and money:</h4><blockquote>Don't let other people or things distract you</blockquote><h4>8 - Don't be afraid to innovate:</h4><blockquote>Following the herd is a sure way to mediocrity</blockquote><h4>9 - Deal and communicate with people effectively:</h4><blockquote>No person is an island. Lean to understand and motivate others</blockquote><h4>10 - Be honest and dependable; Take responsibility:</h4><blockquote>Otherwise, number 1 through 9 won't matter at all</blockquote> <h2>Important Links:</h2><ul><li>Private Lender Podcast on <a href="https://podcasts.apple.com/us/podcast/the-private-lender-podcast/id1329204836" rel="nofollow" target="_blank">iTunes</a></li><li>Private Lender Podcast on <a href="https://www.facebook.com/PrivateLenderPodcast/" rel="nofollow" target="_blank">Facebook</a></li><li>Private Lender Podcast on <a href="https://www.instagram.com/privatelenderpodcast/" rel="nofollow" target="_blank">Instagram</a></li><li>Private Lender Podcast on <a href="https://twitter.com/PrivLendPodcast?lang=en" rel="nofollow" target="_blank">Twitter</a></li><li>Keith Baker on <a href="https://www.linkedin.com/in/keith-baker-344944155/" rel="nofollow" target="_blank">LinkedIn</a></li><li>Keith Baker on <a href="https://www.biggerpockets.com/users/keithbaker" rel="nofollow" target="_blank">BiggerPockets</a></li></ul>

PLP-089 the PLP’s 10 Secrets to Success

This episode is geared towards beginners, so you advanced listeners may want to skip this episode.  However, if you are new to the concept of Private Lending, then give this a listen as it answers many common questions I receive when I explain to people that I am a Private Lender. i wish yo happy, safe and secure lending! Enjoy! -k

This episode is geared towards beginners, so you advanced listeners may want to skip this episode. However, if you are new to the concept of Private Lending, then give this a listen as it answers many common questions I receive when I explain to people that I am a Private Lender. i wish yo happy, safe and secure lending! Enjoy! -k

PLP-002  What funds can you use for Private Lending?

 On today’s show, Keith Baker is joined by Ray Sasser and Landon Rothstein to discuss a niche topic that always seem to have a perceived risk - Subject 2 investing. What does it mean to purchase a property subject 2? Ray is known throughout the investor community as an expert rehabber as well as an expert transaction engineer. Landon is a full-time real estate investor and has teamed up with some amazing partners. Together they host one of the fastest growing real estate meetups in Houston. Don’t miss this episode as they explain Subject 2 investing and lending in the 2nd position.---Subject 2 Investing And Lending In The 2nd PositionRay Sasser &amp; Landon Rothstein Explain Sub2 InvestingI’m going to bring on two guests that have been on the show before. They’re both full-time real estate investors in the Greater Houston area. They are my friends, Ray Sasser and Landon Rothstein. I always tell people to avoid second liens until they are very seasoned and confident in what they’re doing in private lending. However, this topic on subject-to, buying a property subject-to and possibly lending on what money the investor needs to get the seller out of the house. I’ve wanted to talk about this on the show, but I haven’t figured out the best way to do that because I want to learn about it from all angles, not just from the lending perspective but something to incorporate into my investing portfolio. Make no mistake, I’m neither endorsing nor recommending you incorporate junior liens into lending any sub-to deals. It’s a possibility. You can make money and you can lose a lot of money. It's just like any other thing, you’ve got to know what you’re doing and navigate through tricky waters. I want to shed some light on this topic from two people who utilize this strategy in their real estate every day and they’re not out on the circuit trying to sell a book.---I'd like to welcome back two previous guests. Please help me welcome, Mr. Ray Sasser and Mr. Landon Rothstein. This is Ray. I'm honored that you put me on the upper billing of the marquee.You're very welcome. Thanks for coming back on because we are going to discuss a niche topic that I have stayed away lending on these types of deals because of perceived risk. I understand that you are one of the masters of creating a subject-to deal with and then getting private lenders to fund the down payment to the seller. Let's go ahead and back it all up and explain in case nobody knows what it is. What does it mean to purchase a property subject-to?In a nutshell, subject-to is you're taking over the note, the existing financing that's already in place from the seller. A lot of people get involved with subject-to but they don't seem to know the difference between a real subject-to and an assumption. What we're doing is not an assumption. We are leaving the financing in the original seller's name and then we're making the payments for that person. To get there, we have to do some catching up over arrears. I might have to make a payment to a wholesaler. The wholesaler is bringing me the deal and sometimes the seller will want some money. There will be some money that'll take to get into that position. Once you're there, you usually have a nice low-interest rate. I'm getting interest rates. I've had one as low as 2.8%. They're generally around 3% to 4.5%, maybe 5%, which is a whole lot lower than I pay my private lenders. You know this for a fact, Keith, because you're one of them. The subject-to is pretty powerful once you get into them.I charge a lot more than 3% to 5%, don’t I?The main thing I was saying here with the difference between the assumption and taking over the position of the original seller is we're not putting anything in our name, which is critical. You don't want these things in your name. You don't want to have to go through all the hurdles the banks are going to make you go through and get approved for a loan. With the subject-to, that loan is staying in the original seller's name.Landon, I was even told that because you're not personally liable for that, you don't even have to show it as a debt on your income and debt statements. In reality, it looks at income, but you don't have the debt obligation. It makes your P&amp;L look a lot better.That's true because you're not tied to it. Your Social Security is never coming up in that situation. It doesn't get recorded on your credit. It's obviously recorded on the previous seller's credit. That's why you've got to be consistent with making the payments. Another question that I get a lot with the sellers, they'll ask me, “How do I know you're going to make the payment?” Part of what I was saying before is, “If I gave you $10,000 in arrears and gave you another $3,000 and walk away, I don't want to lose that money. I've got to make my monthly payments. Otherwise, the bank is going to foreclose on me.”[bctt tweet="Let time work for you and let the money be your soldier." username=""]If the seller is motivated, this is not near as bigger an issue as people conjure it up to be in their head as potential buyers. The one thing that Landon's said, the arrears, if you're not active out there, you may not understand, but the arrears that almost all these subject-tos that are going to have passed to the payments that are owed. I'm seeing anywhere from $0 to $35,000 or $40,000. If the number gets too big, then it might not make sense to do the sub-to, but you’ve got the arrears and then you’ve got to solve their problem. Their problem might take $5,000 or $10,000 or $20,000 or $30,000. In sub-to, you could literally be in it anywhere. We've been anywhere from $0 to about $50,000 and under the right numbers, they can now make sense.It's not an assumption. You're going to be paying the note for the seller, keeping it in their name. It is not just a great accounting tip from you, Ray, but that's great because it doesn't much hit your credit, it does not reflect it. It doesn't limit up or eat up one of your many mortgages that Fannie Mae will allow. I could see the benefits of that. When you say $50,000 in arrears, I picture a Ray Sasser house, which means that's about 100 Landon houses. One of the things that the subject-to has done for me, I'm getting into a whole lot of nicer houses. I'm getting houses that are over $300,000 or $400,000. I'm getting into them at a low bar. I don't need to jump through all the hoops to get approved for a loan. It may have come up with anywhere from zero to $50,000 to get in. I'm not having these little rinky-dink Landon houses. With the subject-to, it's opening up a whole new, bigger, better world for me.The house that I did the drive-by on out here near me, I was impressed. I had a little tear in my eye for you. I am like, “He's growing up. That's a nice house.”The house he checked out for me in Katy, that's what I'm talking about. That's right in that ballpark that was around a $400,000 house.The arrears, I would assume and correct me if I'm wrong, it's not just payments and late fees to the mortgage, the bank. There’s maybe not a property tax, but the HOA is for sure. What are the hidden fees?A lot of times, there are not really hidden fees because most of the sub-tos come when you do foreclosures or it's pre-foreclosures. A lot of times, we're dealing with a seller and the bank. The bank has what they call suspense accounts. They're accounting for the taxes and the escrows, it does get complicated. Every one of these, you've got to look at how the fees are broken down because you're going to have a foreclosure. You're going to have a payoff amount and a reinstatement amount. The payoff amount might be $90,000 and the reinstatement might be $20,000. The question is, “If I pay the $20,000, does that mean the balance of $70,000?” The answer is no. You have to get the reinstatement amount. You have to get the payoff amount. You have to put the two forms side by side and see which ones you get credit for and which ones you don't. It's very possible that the reinstatement might be $20,000 and the payoff is $90,000, then when you reinstate it, the payoff real balance is $75,000.You have to figure out how they're doing their math because each mortgage company does it differently. You have to make a decision to reinstate. It's not uncommon on a sub-to, for example, the same scenario, $20,000 reinstatement, a $90,000 pay off. Once you reinstate it, the payoff is $75,000. You’ve got to say, “I'm in this for $95,000.” If the seller wants to stay 5%, which is not unusual, then you're in it for $100,000. If it's got after-repair value, ARV, $170,000 or $180,000, you do those deals all day long. If you're a wholesaler, you set it up like that so that when you turn around and sell it to, hopefully, me or Landon or anybody else, then you set that sub-to up, we're much more excited about doing that deal. We'll look at that deal a lot sooner than we might look at some other deal where it's all cash.Landon has asked on several occasions if I'd be willing to give a private loan on a sub-to deal in order to cover the arrears or get the loan reinstated, get the borrower happy, and take a second position behind the existing note. I've also learned from Landon, I'm very conservative and I tell them no politely. I let them down gently. Landon, I understand you've found somebody, a private lender who is taking the second position liens and providing the arrears and let's call it the ketchup money.[caption id="attachment_2706" align="aligncenter" width="600"] Subject 2 Investing: Most of the Sub 2 come when you do foreclosures or pre-foreclosures, you’re dealing with a seller and the bank.[/caption] Let's talk about the technical aspect. The reason why people would say no is because that underlying lien is a first lien. It is putting that lender in the second lien position. As long as there’s a second lender, there are a couple of ways you can offset that is you want to verify the values there. In our scenario, if it's $90,000 or you're in it for $105,000 and the worth is $180,000 and you're bringing that $15,000 or $20,000 as a second lender, you've got an underlying of $75,000. You've got about $20,000 on top of that as a second lender. You've got about $60,000 equity in it. Your top loan-to-value for both loans is probably around 60%. As long as your LTV is low, as long as you can control that first, in other words, let's say Landon gets hit by a bus, do you have the right to come in and make those underlying payments? I think you're relatively safe. Everything else, as a lender, you've got to do your due diligence. Have somebody else put eyes on the property, make sure it's a house. It has four walls, a roof and it's not sitting over a sinkhole. You’ve got to make sure that there's real equity there and do real comps. I think that second liens are never as good as first. As far as second liens go, it's probably a pretty safe bet for the right people.Let me tell you how to negotiate with Landon. He said, “I don't like that. What if you die?” Someone gives you some collateral on something else. I do a blanket mortgage for these collaterals.That was my next point is if you can collateralize that second appropriately, then you eliminate and mitigate a lot of risks if you cross collateralize to protect that second. I like that idea. This is a true private lender. This is someone you had a relationship with before. You didn't pick them out of the phone book. You told him, “I'm doing real estate investing, it is a big deal what I'm doing.”I knew him before my real estate investing days.This is not a private lender thing. It's understanding the process. If you don't understand it, then it's worth learning because there are banks out there that do nothing but loan car dealers money to buy cars with. To me, how can a bank prosper and grow and go from one branch to the seven branches and work with that market segment with all the shenanigans that are going on? It's knowing who you're dealing with, knowing that you're properly collateralized and making sure that the properties are what you think they are. If you checked the boxes that need to be checked, that it's very doable.This is why I wanted to have you both on the show to not only explain it to me but also to the audience because to me, the second lien is a bad word. I call it the Dave Ramsey effect. He says, don't use credit because he screwed up his credit. I tell people don't do second liens.Dave Ramsey also said that we're having a depression in the real estate market because the number of houses reduced. It wasn't because we were having a depression. It was because the inventory dropped. People were buying houses as fast as they can be produced. I don't know about Dave Ramsey. I like a lot of what he says, but the devil's in the details. You have to figure out what the details are. Second liens get a bad name because, for example, there are people out there that go and get hard money loans. There are $30,000 or $40,000 short. They can't get to the first draw, so they bring in somebody else. To me, that's a high-risk loan. That's a product that's not performing. You're relying on the first borrower, the person borrowing on the first lien. You're requiring for that guy to produce a product that's not existing. If the house is not performing, he's going to turn it into something, but you've got to make up, $40,000 or $50,000 he's short because he can't afford the down payment. He can't afford the first draw.Those people are doing those second liens. That scares the hell out of me. There are too many things that can't work. In this case, you've got a property that's probably already mature, that's in a reasonable subdivision. A lot of times, these houses are built from 2005 to 2009 when the interest rates were low. They don't need any major improvement. I would be more concerned with a major rehabber borrowing money because he doesn't have enough money holding capital to get through the first stages of the deal. Second liens can be very dangerous. That's called gap funding and I've never understood why anybody would be a lender in gap funding. I don’t know if you have people that come on and talk about that.No, in that scenario. I get approached a lot. I've got this hard money lender who will do the loan. I just need to come up with this cash and it's no, because I'm not investing in a property so much at that point. I'm investing in a process, that guy's work product, whether he or she is able to perform much riskier, than a properly collateralized second lien.[bctt tweet="Everything in real estate can be complicated. You need to educate yourself." username=""]I've been in the leadership role in the REIA for quite a few years. We hear a lot of the horror stories that people don't talk about. We had our REIA here in San Antonio. We had people that had about fifteen rehabs going and they were getting gap funding for every one of them. Their days on market extended and they started holding the houses a little bit longer and all their loans started collapsing. We didn't even know it was going on. A couple of our members came to us and literally said, “This is what we're dealing with. What can we do?” We gave them the best advice and gave them names of the attorneys that specialize in that. Almost all those people lost their gap funding because they were being second lien holders on projects that people were working on.They weren't even qualified to get them done. If you're going to be a gap funder, you better be like a JV partner. You better have a way to buy that person out. It’s better to be with somebody that's got a real track record. Not somebody who's been doing it for 2 or 3 years, but somebody doing it for a long time and has done a lot of transactions. I got in front of the room in San Antonio and said, “If you're a gap funder and you're not a professional lender, you're probably going to lose money.” We'd stop.I’ve got to keep you away from one of my lenders. I have a bridge loan set up with one of my lenders. He gave me a $600,000 line of credit that I'm using as a temporary place and hold it until I get long-term financing in place. I've got a company that will let me do long-term wraps. I'm using my private lender’s money to get the deals because time is of the essence. You’ve got to have your cash ready to go and he has as good as cash. I literally get it sometimes the same day or usually the latest the next day. I've got the money instantly. We process them off with this company that's letting me do the long-term loans.What interest rate are you getting?For the long-term money, its 8.5%.That's pretty good.It is because they're the only people in the whole world that seemed to let me do a wrap.Are you doing a sub-to or a wrap? Before you get into that, Landon may have told you that we're doing a webinar and we’re going to talk more about this and then we're doing a whole day class on sub-to on how to negotiate for the sub-tos, how to do and talk about what the extra strategies will be, which will include either renting or doing a wrap. Even for flippers, it’s good because for a flipper, instead of bringing in $100,000 to the table, you might be bringing $20,000. The point that people miss is that if you're the wholesaler and you have options sending this up and say, “I'm going to sell this to my potential buyers. I'm going to negotiate an all-cash transaction.” If you were to say, “Try for the sub-to first as a wholesaler, then structure that.” When you go to sell it to the marketplace, somebody like me or Landon or people that are really active, if you say, “You only have to bring $20,000 to the table because $70,000 or $80,000 can be done a subject-to,” even as a flipper, that's a good thing. I might not have to bring in a hard money lender. If I don't have to bring in a hard money or private lender for that first because I'm taking it over as a sub-to, that deal gets to be a lot more attractive. I might be able to do it out of my IRA and my bank account and I don't have to pay those extra costs. If you don't mind, can you tell them what the wrap is and what that means and how you're doing it?The wrap means that there's already an underlying lien in place. When I sell, I sell to my end buyer on owner finance. These are perfectly fine. You’ve got to disclose that you have an underlying lien. You can’t not tell the end buyer that there's an underlying lien there. My lender is okay with it. My borrower is okay with it. As long as all your documents are signed, you're fine. Some of the other things I would've added there with the classes that we're going to have is a checklist for the subject-to process. We have a separate checklist for documents that I need...

On today’s show, Keith Baker is joined by <a href="http://raysasser.com/" rel="nofollow" target="_blank">Ray Sasser</a> and <a href="https://www.sellerfinanceme.com/" rel="nofollow" target="_blank">Landon Rothstein</a> to discuss a niche topic that always seem to have a perceived risk - Subject 2 investing. What does it mean to purchase a property subject 2? Ray is known throughout the investor community as an expert rehabber as well as an expert transaction engineer. Landon is a full-time real estate investor and has teamed up with some amazing partners. Together they host one of the fastest growing real estate meetups in Houston. Don’t miss this episode as they explain Subject 2 investing and lending in the 2nd position.---<h2>Subject 2 Investing And Lending In The 2nd Position</h2><h3>Ray Sasser &amp; Landon Rothstein Explain Sub2 Investing</h3>I’m going to bring on two guests that have been on the show before. They’re both full-time real estate investors in the Greater Houston area. They are my friends, <a href="https://www.linkedin.com/in/ray-sasser-47b12725" rel="nofollow" target="_blank">Ray Sasser</a> and <a href="https://www.linkedin.com/in/landon-rothstein" rel="nofollow" target="_blank">Landon Rothstein</a>. I always tell people to avoid second liens until they are very seasoned and confident in what they’re doing in private lending. However, this topic on subject-to, buying a property subject-to and possibly lending on what money the investor needs to get the seller out of the house. I’ve wanted to talk about this on the show, but I haven’t figured out the best way to do that because I want to learn about it from all angles, not just from the lending perspective but something to incorporate into my investing portfolio. Make no mistake, I’m neither endorsing nor recommending you incorporate junior liens into lending any sub-to deals. It’s a possibility. You can make money and you can lose a lot of money. It's just like any other thing, you’ve got to know what you’re doing and navigate through tricky waters. I want to shed some light on this topic from two people who utilize this strategy in their real estate every day and they’re not out on the circuit trying to sell a book.---I'd like to welcome back two previous guests. Please help me welcome, Mr. <a href="https://www.linkedin.com/in/ray-sasser-47b12725" rel="nofollow" target="_blank">Ray Sasser</a> and Mr. <a href="https://www.linkedin.com/in/landon-rothstein" rel="nofollow" target="_blank">Landon Rothstein</a>. This is Ray. I'm honored that you put me on the upper billing of the marquee.You're very welcome. Thanks for coming back on because we are going to discuss a niche topic that I have stayed away lending on these types of deals because of perceived risk. I understand that you are one of the masters of creating a subject-to deal with and then getting private lenders to fund the down payment to the seller. Let's go ahead and back it all up and explain in case nobody knows what it is. What does it mean to purchase a property subject-to?In a nutshell, subject-to is you're taking over the note, the existing financing that's already in place from the seller. A lot of people get involved with subject-to but they don't seem to know the difference between a real subject-to and an assumption. What we're doing is not an assumption. We are leaving the financing in the original seller's name and then we're making the payments for that person. To get there, we have to do some catching up over arrears. I might have to make a payment to a wholesaler. The wholesaler is bringing me the deal and sometimes the seller will want some money. There will be some money that'll take to get into that position. Once you're there, you usually have a nice low-interest rate. I'm getting interest rates. I've had one as low as 2.8%. They're generally around 3% to 4.5%, maybe 5%, which is a whole lot lower than I pay my private lenders. You know this for a fact, Keith, because you're one of them. The subject-to is pretty powerful once you get into them.I charge a lot more than 3% to 5%, don’t I?The main thing I was saying here with the difference between the assumption and taking over the position of the original seller is we're not putting anything in our name, which is critical. You don't want these things in your name. You don't want to have to go through all the hurdles the banks are going to make you go through and get approved for a loan. With the subject-to, that loan is staying in the original seller's name.Landon, I was even told that because you're not personally liable for that, you don't even have to show it as a debt on your income and debt statements. In reality, it looks at income, but you don't have the debt obligation. It makes your P&amp;L look a lot better.That's true because you're not tied to it. Your Social Security is never coming up in that situation. It doesn't get recorded on your credit. It's obviously recorded on the previous seller's credit. That's why you've got to be consistent with making the payments. Another question that I get a lot with the sellers, they'll ask me, “How do I know you're going to make the payment?” Part of what I was saying before is, “If I gave you $10,000 in arrears and gave you another $3,000 and walk away, I don't want to lose that money. I've got to make my monthly payments. Otherwise, the bank is going to foreclose on me.”[bctt tweet="Let time work for you and let the money be your soldier." username=""]If the seller is motivated, this is not near as bigger an issue as people conjure it up to be in their head as potential buyers. The one thing that Landon's said, the arrears, if you're not active out there, you may not understand, but the arrears that almost all these subject-tos that are going to have passed to the payments that are owed. I'm seeing anywhere from $0 to $35,000 or $40,000. If the number gets too big, then it might not make sense to do the sub-to, but you’ve got the arrears and then you’ve got to solve their problem. Their problem might take $5,000 or $10,000 or $20,000 or $30,000. In sub-to, you could literally be in it anywhere. We've been anywhere from $0 to about $50,000 and under the right numbers, they can now make sense.It's not an assumption. You're going to be paying the note for the seller, keeping it in their name. It is not just a great accounting tip from you, Ray, but that's great because it doesn't much hit your credit, it does not reflect it. It doesn't limit up or eat up one of your many mortgages that Fannie Mae will allow. I could see the benefits of that. When you say $50,000 in arrears, I picture a Ray Sasser house, which means that's about 100 Landon houses. One of the things that the subject-to has done for me, I'm getting into a whole lot of nicer houses. I'm getting houses that are over $300,000 or $400,000. I'm getting into them at a low bar. I don't need to jump through all the hoops to get approved for a loan. It may have come up with anywhere from zero to $50,000 to get in. I'm not having these little rinky-dink Landon houses. With the subject-to, it's opening up a whole new, bigger, better world for me.The house that I did the drive-by on out here near me, I was impressed. I had a little tear in my eye for you. I am like, “He's growing up. That's a nice house.”The house he checked out for me in Katy, that's what I'm talking about. That's right in that ballpark that was around a $400,000 house.The arrears, I would assume and correct me if I'm wrong, it's not just payments and late fees to the mortgage, the bank. There’s maybe not a property tax, but the HOA is for sure. What are the hidden fees?A lot of times, there are not really hidden fees because most of the sub-tos come when you do foreclosures or it's pre-foreclosures. A lot of times, we're dealing with a seller and the bank. The bank has what they call suspense accounts. They're accounting for the taxes and the escrows, it does get complicated. Every one of these, you've got to look at how the fees are broken down because you're going to have a foreclosure. You're going to have a payoff amount and a reinstatement amount. The payoff amount might be $90,000 and the reinstatement might be $20,000. The question is, “If I pay the $20,000, does that mean the balance of $70,000?” The answer is no. You have to get the reinstatement amount. You have to get the payoff amount. You have to put the two forms side by side and see which ones you get credit for and which ones you don't. It's very possible that the reinstatement might be $20,000 and the payoff is $90,000, then when you reinstate it, the payoff real balance is $75,000.You have to figure out how they're doing their math because each mortgage company does it differently. You have to make a decision to reinstate. It's not uncommon on a sub-to, for example, the same scenario, $20,000 reinstatement, a $90,000 pay off. Once you reinstate it, the payoff is $75,000. You’ve got to say, “I'm in this for $95,000.” If the seller wants to stay 5%, which is not unusual, then you're in it for $100,000. If it's got after-repair value, ARV, $170,000 or $180,000, you do those deals all day long. If you're a wholesaler, you set it up like that so that when you turn around and sell it to, hopefully, me or Landon or anybody else, then you set that sub-to up, we're much more excited about doing that deal. We'll look at that deal a lot sooner than we might look at some other deal where it's all cash.Landon has asked on several occasions if I'd be willing to give a private loan on a sub-to deal in order to cover the arrears or get the loan reinstated, get the borrower happy, and take a second position behind the existing note. I've also learned from Landon, I'm very conservative and I tell them no politely. I let them down gently. Landon, I understand you've found somebody, a private lender who is taking the second position liens and providing the arrears and let's call it the ketchup money.[caption id="attachment_2706" align="aligncenter" width="600"] Subject 2 Investing: Most of the Sub 2 come when you do foreclosures or pre-foreclosures, you’re dealing with a seller and the bank.[/caption] Let's talk about the technical aspect. The reason why people would say no is because that underlying lien is a first lien. It is putting that lender in the second lien position. As long as there’s a second lender, there are a couple of ways you can offset that is you want to verify the values there. In our scenario, if it's $90,000 or you're in it for $105,000 and the worth is $180,000 and you're bringing that $15,000 or $20,000 as a second lender, you've got an underlying of $75,000. You've got about $20,000 on top of that as a second lender. You've got about $60,000 equity in it. Your top loan-to-value for both loans is probably around 60%. As long as your LTV is low, as long as you can control that first, in other words, let's say Landon gets hit by a bus, do you have the right to come in and make those underlying payments? I think you're relatively safe. Everything else, as a lender, you've got to do your due diligence. Have somebody else put eyes on the property, make sure it's a house. It has four walls, a roof and it's not sitting over a sinkhole. You’ve got to make sure that there's real equity there and do real comps. I think that second liens are never as good as first. As far as second liens go, it's probably a pretty safe bet for the right people.Let me tell you how to negotiate with Landon. He said, “I don't like that. What if you die?” Someone gives you some collateral on something else. I do a blanket mortgage for these collaterals.That was my next point is if you can collateralize that second appropriately, then you eliminate and mitigate a lot of risks if you cross collateralize to protect that second. I like that idea. This is a true private lender. This is someone you had a relationship with before. You didn't pick them out of the phone book. You told him, “I'm doing real estate investing, it is a big deal what I'm doing.”I knew him before my real estate investing days.This is not a private lender thing. It's understanding the process. If you don't understand it, then it's worth learning because there are banks out there that do nothing but loan car dealers money to buy cars with. To me, how can a bank prosper and grow and go from one branch to the seven branches and work with that market segment with all the shenanigans that are going on? It's knowing who you're dealing with, knowing that you're properly collateralized and making sure that the properties are what you think they are. If you checked the boxes that need to be checked, that it's very doable.This is why I wanted to have you both on the show to not only explain it to me but also to the audience because to me, the second lien is a bad word. I call it the Dave Ramsey effect. He says, don't use credit because he screwed up his credit. I tell people don't do second liens.Dave Ramsey also said that we're having a depression in the real estate market because the number of houses reduced. It wasn't because we were having a depression. It was because the inventory dropped. People were buying houses as fast as they can be produced. I don't know about Dave Ramsey. I like a lot of what he says, but the devil's in the details. You have to figure out what the details are. Second liens get a bad name because, for example, there are people out there that go and get hard money loans. There are $30,000 or $40,000 short. They can't get to the first draw, so they bring in somebody else. To me, that's a high-risk loan. That's a product that's not performing. You're relying on the first borrower, the person borrowing on the first lien. You're requiring for that guy to produce a product that's not existing. If the house is not performing, he's going to turn it into something, but you've got to make up, $40,000 or $50,000 he's short because he can't afford the down payment. He can't afford the first draw.Those people are doing those second liens. That scares the hell out of me. There are too many things that can't work. In this case, you've got a property that's probably already mature, that's in a reasonable subdivision. A lot of times, these houses are built from 2005 to 2009 when the interest rates were low. They don't need any major improvement. I would be more concerned with a major rehabber borrowing money because he doesn't have enough money holding capital to get through the first stages of the deal. Second liens can be very dangerous. That's called gap funding and I've never understood why anybody would be a lender in gap funding. I don’t know if you have people that come on and talk about that.No, in that scenario. I get approached a lot. I've got this hard money lender who will do the loan. I just need to come up with this cash and it's no, because I'm not investing in a property so much at that point. I'm investing in a process, that guy's work product, whether he or she is able to perform much riskier, than a properly collateralized second lien.[bctt tweet="Everything in real estate can be complicated. You need to educate yourself." username=""]I've been in the leadership role in the REIA for quite a few years. We hear a lot of the horror stories that people don't talk about. We had our REIA here in San Antonio. We had people that had about fifteen rehabs going and they were getting gap funding for every one of them. Their days on market extended and they started holding the houses a little bit longer and all their loans started collapsing. We didn't even know it was going on. A couple of our members came to us and literally said, “This is what we're dealing with. What can we do?” We gave them the best advice and gave them names of the attorneys that specialize in that. Almost all those people lost their gap funding because they were being second lien holders on projects that people were working on.They weren't even qualified to get them done. If you're going to be a gap funder, you better be like a JV partner. You better have a way to buy that person out. It’s better to be with somebody that's got a real track record. Not somebody who's been doing it for 2 or 3 years, but somebody doing it for a long time and has done a lot of transactions. I got in front of the room in San Antonio and said, “If you're a gap funder and you're not a professional lender, you're probably going to lose money.” We'd stop.I’ve got to keep you away from one of my lenders. I have a bridge loan set up with one of my lenders. He gave me a $600,000 line of credit that I'm using as a temporary place and hold it until I get long-term financing in place. I've got a company that will let me do long-term wraps. I'm using my private lender’s money to get the deals because time is of the essence. You’ve got to have your cash ready to go and he has as good as cash. I literally get it sometimes the same day or usually the latest the next day. I've got the money instantly. We process them off with this company that's letting me do the long-term loans.What interest rate are you getting?For the long-term money, its 8.5%.That's pretty good.It is because they're the only people in the whole world that seemed to let me do a wrap.Are you doing a sub-to or a wrap? Before you get into that, Landon may have told you that we're doing a webinar and we’re going to talk more about this and then we're doing a whole day class on sub-to on how to negotiate for the sub-tos, how to do and talk about what the extra strategies will be, which will include either renting or doing a wrap. Even for flippers, it’s good because for a flipper, instead of bringing in $100,000 to the table, you might be bringing $20,000. The point that people miss is that if you're the wholesaler and you have options sending this up and say, “I'm going to sell this to my potential buyers. I'm going to negotiate an all-cash transaction.” If you were to say, “Try for the sub-to first as a wholesaler, then structure that.” When you go to sell it to the marketplace, somebody like me or Landon or people that are really active, if you say, “You only have to bring $20,000 to the table because $70,000 or $80,000 can be done a subject-to,” even as a flipper, that's a good thing. I might not have to bring in a hard money lender. If I don't have to bring in a hard money or private lender for that first because I'm taking it over as a sub-to, that deal gets to be a lot more attractive. I might be able to do it out of my IRA and my bank account and I don't have to pay those extra costs. If you don't mind, can you tell them what the wrap is and what that means and how you're doing it?The wrap means that there's already an underlying lien in place. When I sell, I sell to my end buyer on owner finance. These are perfectly fine. You’ve got to disclose that you have an underlying lien. You can’t not tell the end buyer that there's an underlying lien there. My lender is okay with it. My borrower is okay with it. As long as all your documents are signed, you're fine. Some of the other things I would've added there with the classes that we're going to have is a checklist for the subject-to process. We have a separate checklist for documents that I need...

PLP 093-Subject 2 Investing And Lending In The 2nd Position

Listen to the first Private Lender Master Class in its entirety for FREE! On March 27th, 2019 the first event sponsored by the Private Lender Pocast and the Private Lender Academy was held at Quest Trust Company in Houston, TX.  Wendy Bryan from WFG Title was the keynote speaker as she dropped a ton of title insurance knowledge in a very short amount of time!  I even learned a few new things that I am incorporating into my underwriting demands and title policy conditions.   Make sure you sign up to find out when and where the next Private Lender Academy will take place!   Love the show? Subscribe, rate, review, and share!  Here’s How »  Join the Private Lender Podcast community today:  PrivateLenderPodcast.com Private Lender Podcast Facebook Keith Baker on LinkedIn Private Lender Podcast Twitter Private Lender Podcast YouTube 

<h1><a href="http://privatelenderpodcast.com/?p=2295&amp;preview=true" rel="nofollow" target="_blank">Listen to the first Private Lender Master Class in its entirety for FREE!</a></h1> <h4>On March 27th, 2019 the first event sponsored by the <a href="http://www.privatelenderpodcast.com/" rel="external noopener noreferrer nofollow" target="_blank">Private Lender Pocast</a> and the <a href="http://www.privatelenderacademy.com/" rel="external noopener noreferrer nofollow" target="_blank">Private Lender Academy</a> was held at Quest Trust Company in Houston, TX.  Wendy Bryan from WFG Title was the keynote speaker as she dropped a ton of title insurance knowledge in a very short amount of time!  I even learned a few new things that I am incorporating into my underwriting demands and title policy conditions.</h4> <h4> </h4> <h4>Make sure you <a href="http://www.privatelenderpodcast.com/contact" rel="external noopener noreferrer nofollow" target="_blank">sign up</a> to find out when and where the next Private Lender Academy will take place!</h4> Love the show? Subscribe, rate, review, and share! <ul> <li><a href="http://privatelenderpodcast.com/blog/how-to-subscribe-rate-our-podcast-5-stars-on-itunes/" rel="noopener nofollow" target="_blank">Here’s How »</a></li> </ul> Join the Private Lender Podcast community today: <ul> <li><a href="http://privatelenderpodcast.com/" rel="noopener nofollow" target="_blank">PrivateLenderPodcast.com</a></li> <li><a href="https://www.facebook.com/PrivateLenderPodcast/" rel="noopener external noreferrer nofollow" target="_blank">Private Lender Podcast Facebook</a></li> <li><a href="https://www.linkedin.com/in/keith-baker-344944155/" rel="noopener external noreferrer nofollow" target="_blank">Keith Baker on LinkedIn</a></li> <li><a href="https://twitter.com/PrivLendPodcast?lang=en" rel="noopener external noreferrer nofollow" target="_blank">Private Lender Podcast Twitter</a></li> <li><a href="https://www.youtube.com/channel/UCzctXatpCAOhF0XeV1fq2dQ?view_as=subscriber" rel="noopener external noreferrer nofollow" target="_blank">Private Lender Podcast YouTube</a></li> </ul>

PLP-070 First Private Lender Academy event – Title Class

I'm running a little behind schedule so show notes are a few weeks away.Sorry for any inconvenience-k

I'm running a little behind schedule so show notes are a few weeks away.Sorry for any inconvenience-k

PLP-088 Never Trust, Always Verify

Today’s episode is going to be geared for newbies or people who might be unsure how to start or where to kind of start the conversation with a potential borrower and it goes hand in hand with a sort of an announcement, I’m proud to announce. Happy to announce, relieved to announce that you can finally now get your copy of the private lenders loan application Guide and checklist over at the website, privatelenderpodcast.com and I’m going to kind of walk you through it a little bit today. So, if you have don’t have it yet. I would, you know, go get it and save this episode for later when you can sit down at a desk and kind of look through it. So if you’re running, driving to work, obviously you’re not going to be able to do those things or at the gym.   Click here to get your discounted tickets for the Quest Trust Company’s Self-Directed IRA Expo GET TO A SAFE SPOT So if you have to then go ahead and pause it and come back later. You can go to the Private Lender Podcast.com and just sign up anywhere, any sign up form that you see, name an email, fill that out and you will get the private lenders loan application Guide and checklist. And I put it together to kind of walk through a couple of ideas or themes and notions. And I’m going to go through those with you here today. I’ve always said that when it comes to a loan, I like to look at the person a their process and then the property. And that’s what I lay out in this, in this checklist, you want to know how much real estate investing experience they have if they’re just starting off or if they’re new, politely send them over to hard money lenders. That’s what they’re there for is to really help new people, new people, newbies, first-timers, be successful and let them do it with hard money, not yours. LOOK FOR GRAY HAIR That’s, that’s my suggestion. Look for what you’re, you know, if you have a borrow who’s been doing this for 20 years and they’re a flipper and they continue to flip, that’s great. That’s someone you might be comfortable with, especially if you have a good relationship with them. If you have a flipper or let’s say, let’s say you have a landlord who wants to go into flipping that process, I’m not too comfortable with because here’s somebody who has succeeded as or succeeded as a flipper, rehabber and now it’s to switch gears. I’m sorry, I just messed that up. Didn’t I? Someone who’s successful as a landlord, but now they want to switch gears and get some quick cash again. I would send them over to the hard money folks until they get a few flips under their belt. It’s a, it’s a little bit different game and I like to invest with people who know what they’re doing and stay in their lane. So that is a touch on the person you want to know if do they have, what’s the record like in not just a criminal record or any, what was their record as a person do that? Have they been arrested a lot? You know, one or two times. Okay. Or not. I’m saying, okay, but what was the, what were the circumstances behind, do they have judgments against them? Have they been sued? Because here’s it. This is where it gets tricky because I, I’m trying to think of someone who’s landlord for a very long time who at least wasn’t threatened to be sued or contacted by attorneys, by tenants that know how to game the system so to speak. Uh, and I’m not trying to condone slumlords or anything like that. It’s just I know some good people who have been sued, uh, as landlords frivolously, but, um, unfortunately sued nonetheless. BE JUDGMENTAL So if they do have judgments or they have been sued, find out why. You know, are they behind on child support? Uh, you know, what, find out the reason. Do they have lousy credit cause they just got divorced or you know, have they had gone through a really crappy life event? Like, uh, someone getting sick or they themselves getting sick, but also want to note if the person that I’m loaning to has a reputation to uphold in their investing or their real estate investing community, that the, those things kind of help up help you mitigate risk so that when you go into the loan, it’s pretty much a no brainer, but that person is at the end of the day, you’re lending to a person. Yes, there’s a deal, there’s a property, but at the end of the day there’s a person and that’s where I think you should, you should start with at least that’s where I do and their process, like I said, what do they do? Are they, you know, is this their 100th rehab flip or is this their 32nd rental property? Then you know, I have a comfort level with that. And then you look at the property and is it a, is it a property class that you’re comfortable? Is it single family is a multi, as a small multi, what is the deal? Most of this is going to be geared towards single family. This checklist that I’ve provided and the guide is loans towards single family. In the future I will have other property classes, but for now this is where I’m trying to follow the, the, the model of most people get into single family and then move on up. I’m trying to do the same thing with this podcast and with the checklist and guides and stuff like that. So, um, this is all going to be geared towards a single family flip or it could be an owner finance deal or it could be a landlord, a buy and hold, but you get to the last page and there’s basically the checklist. WHO IS THE BORROWER? Who’s the borrow? Who are they, what’s their experience? I like to see some type of portfolio of what they’ve done in a, an an investor profile. So basically what that means in what type of portfolio do they have, how can they demonstrate their experience? Can they show me some HUD statements, a loan application, a loan request applicant fill up, fill out an application, get the basics from them. If you’re lending to an entity, you definitely want to get the formation documents for the entity. Articles of incorporation, uh, another to DBA organization. Who are the players who’s involved under that name of, you know, real estate investor LLC. And for every individual that’s a member of the LLC or for every individual that I loan to, I asked for a copy of the driver’s license and social security card just in case. That’s kind of my little insurance policy. I wouldn’t want a loan without knowing exactly having a state number or a federal number to attract these people down in case the worst does ultimately end up happening that way it’s, you know, you don’t run, you don’t necessarily have to run credit right off the bat. I like to let them do it through, uh, something that doesn’t Ding them on their credit, like Credit Karma or one of those sites. However, if things do go south, I’m going to be ready to act quick. And if I have a social security card and a driver’s license, I can do so. The other option or let’s the [inaudible] option when I’m looking. The other thing, when it comes to the borrowers, can they repay the loan as agreed? You know, do they have enough reserves? Are they a full time real estate investor? If they’re not, if they’re, you know, if they have a full time job, then let’s, if they say, look, I like to request pay stubs just to see if the people are telling the truth. Most recent tax return as well helps out. It gets complicated with when people leave corporate world and can become a real estate investor because now they’re on bankable. So I want to see why they’re unbankable. I want to see that to prove that they’re in bankable. Uh, that helps me feel a little, you know, a little better with a person, especially if I don’t know them that well. But I tend to loan to people I know. Not always, but I tend to. So you can also look for bank statements. I look for business and personal as well. I want to see if, if the cost, if the cost of the loan is going to cost, the price of the loan is going to cost them $5,000 for let’s say for a rehab flip. I want to make sure they’ve got the five grand ready to go and you know, and they can pay some draws up front. I love to see that brick construction draws. They’re ready to go. They’ve got money, so they’ll pay the contractors. Then they request a draw from me, so I’ll send out the inspector. They check it off, boom. We can wire the money, uh, usually within 24 hours to replenish the borrower’s bank account and to continue the, the Rehab of the property. I like to see additional personal assets, investments in investment properties. Again, back to the portfolio of the real estate investment experience. They have 401k’s four oh three bs pension stocks, bonds, mutual funds, whatever. Fidelity, Schwab, do they have cash if, if something goes south, do they have cash to make their lender whole? In the meantime, that’s what I want to see. Get your discounted tickets for the Quest Trust Company’s Self-Directed IRA Expo I also want to have them execute a business loan disclosure, which basically says this loan is for a non owner occupant. This is a business loan to an investor. That investor cannot spend any time habitate the occupier habitate that property other than to fix it up, sell it or to lease it out to someone else. But that person, the person I’m loaning the money to cannot use that house as a residence because now that becomes a retail loan or a consumer loan and the rules change and the consumer’s protected much more than the business folks because the government and the laws basically assume if you’re doing business and you should know what you’re doing. And we all know that predatory lending does exist to certain folks and we saw it in the last downturn. So I always want to make sure they get, and I get an executed business loan disclosure so they know that they’re not allowed to live in the property. BEWARE OF OWNER OCCUPANTS – THERE ARE DIFFERENT RULES! If they do want to live in a property, that’s fine, but there’s a whole other avenue to go down, which this checklist doesn’t cover. So just want to tell you about them. Now on the property, I want to see the earnest money contract with all addendums and or assignments. I like to get local neighborhood statistics and I don’t necessarily require that from the the borrower. I hope that they have some of that in their due diligence in their package that they present and some of the documentation that they present to me. But you know you can make money in and high crime areas, you can make money in low crime areas. It just depends on what you like. I know people who buy houses for $20,000 lease them out and don’t have any contracts with people. It’s month to month and they pretty much know that at some point they’re going to, they’re going to have to evict and so they, they plan for it. It’s not type of investing I want to do, but maybe it is something that maybe your one of your bars want to do and they’re comfortable with that and they know that there’s good money, there’s good cashflow in those types of properties if you know how to manage them. And if you get someone who can manage, operate, and manage them good, that are well then for the lender you’ll never even know as long as they make their payments and your pain is agreed to. Everything is fine. I like to see a scope of repair and or the bids, I want to see it all. I want to see who’s coming out to the property. Who’s, you know, is it their cousin who lays tile just throwing out some random numbers or is it, do they have a contractor that’s come out and said, okay, you want to flip or whatever. PRIVATE LENDER’S LOAN APPLICATION AND CHECKLIST This is what we’re going to do to get it to a habitable condition. This is what it’s going to cost. Does the scope of repairs do the repairs? Are they, are they appropriate for the neighborhood? That’s why I was allowed to look at the comps a as well, but don’t get, don’t get your comps from the borrower because they’re gonna, they’re gonna put lipstick on that pig. You go get your own comps or rely on the the appraiser. I also want to have permission to visit or inspect the property and access lockbox code or whatever that’s for local. Like I said, I start off, um, if you’re new, I suggest you start local before you cross county lines or state lines, but be able to go touch and see, smell the property that you’re, you’re investing in and putting money on first. So I want permission. Just because I’m the lender doesn’t mean I can go to the property whenever I want. So I like to get permission. I also like to see a recent survey, the subject property I want to, I didn’t know that something is, is recent. When I say like, you know, five years is a, what I would consider fairly recent. As long as nothing has been constructed, torn down or anything else like that. Uh, I mentioned appraisal. You want to get your appraisal, you want to get an or a CMA, broker price opinion, something. I like to do my own comps. I’d like to dig into them. And usually appraisers will give links into your mls system that you can drill down into the photos and look at the, the furnishings and the treatments or the, sorry, the finishes on the property so that you’re, you’re not providing a, a retail loan or providing a loan to somebody who’s going to go into a house and put four mica or laminate countertops when the rest of the neighborhood is marvel. Vice versa. You don’t want to put marble in a neighborhood that everything else is going to be laminated. Do you want to know what’s around and make sure that your investor, your borrower is keen on that and that they’re not going to over or under serve the property. Get your discounted tickets for the Quest Trust Company’s Self-Directed IRA Expo Yeah. And it goes without saying. You’re going to get a copy of clear title commitment and the closer contact info. And then there’s the insurance policies. And what happens is you get binders a so the policies won’t incept until the day of closing. So you yourself won’t have the policy. But they insurance companies give what’s called a binder where they will say, okay, a upon closing this property insurance will be in place. Same thing. You definitely going to get a lender’s title policy for the full amount of your loan to make sure that you’re made whole in case, God forbid something happens. Okay. I want to see that evidence of property hazard insurance or the binder and the limits must be no less than 100% of the ARV and or anticipated listing price. And if it’s going to be a short term, I like, I like to see where it is going to be at least a six month policy put in place or some type of short term policy. I don’t mind lenders only getting a few, sorry. Borrowers only getting a few months of insurance when they’re going to be flipping a house and turning it fairly quickly. But while they do own it and while my money’s on that house, I want to make damn sure that they’ve got some, some property insurance hazard insurance there. And because I live in the Houston area now, I require um, flood insurance through FEMA, a national flood insurance program. It’s still dirt cheap, cheapest insurance there is out there. And a lot of people don’t understand that homeowner’s or landlord policies, dwelling policies do not cover flood from a hurricane or a river. They don’t cover flood at all. INSURANCE IS NON-NEGOTIABLE I like to see, like I said, I want to see those binders ready to go. I want to see what those limits of the policies are gonna be. Just so that, you know, they’ll say simple math and ARV of a house is going to be a hundred grand and I’m loaning 50 on it. I want to make sure that if anything I think burns down that   I like to see the a hundred grand there because the limit of a hundred grand for the ARV, not including the property because what I’ll probably should do an old episode on this, but there’s something called the Co insurance clause, which I believe I spoke about last episode. Okay. But if you don’t ensure at least 80 or 90% of the ARV or what the true property value is, if there is a claim, then the insurance companies will deduct, or you only get, say, let’s say if you insure $100,000 house for 50,000 and you completely get wiped out. Let’s say a hurricane comes through or a tornado and that hundred thousand is out, but you’ve put limits on for 50 all you get is 50 so if you’re the lender, maybe you get paid back. If you put 50 if you’re down, you know, if you’re only in there for fit 50 50 grand. Where it really bites is, let’s say that $100,000 home has a, and the borrower has only put a $50,000 limit or 50% of the value on insurance. Then there’s a $50,000 claim. Half of that house is damaged and has to be rebuilt. It’ll insurance is only going to pay for half of it. That will pay according to the percentage of value that you insured. So that’s why I say, you know, get 100% of the ARV value, protects you, protects the borrower, and it’s just the next room, a little, a little cushion, so to speak in a, and we’re trying to keep the, trying to keep your money safe. So if you want to go get your private lenders loan application Guide and checklist, again, go to private Leonard, podcast.com and I’ve, um, I’m, I’m experimenting with this little pop up so that when it looks like you’re gonna leave the page, it’ll pop up and it’s a, it’s got all the wrong copy and everything on it, but I, uh, I’m going to try to change it here shortly, uh, but I just wanted to get it out there and get it into people’s hands and I like to know what you think about it. Get your discounted tickets for the Quest Trust Company’s Self-Directed IRA Expo  Important Links:  PrivateLenderPodcast.com/expo BiggerPockets – Keith...

Today’s episode is going to be geared for newbies or people who might be unsure how to start or where to kind of start the conversation with a potential borrower and it goes hand in hand with a sort of an announcement, I’m proud to announce. Happy to announce, relieved to announce that you can finally now get your copy of the private lenders loan application Guide and checklist over at the website, <a href="http://privatelenderpodcast.com" rel="nofollow" target="_blank">privatelenderpodcast.com</a> and I’m going to kind of walk you through it a little bit today. So, if you have don’t have it yet. I would, you know, go get it and save this episode for later when you can sit down at a desk and kind of look through it. So if you’re running, driving to work, obviously you’re not going to be able to do those things or at the gym. <h3><a href="http://privatelenderpodcast.com/expo/" rel="noopener nofollow" target="_blank">Click here to get your discounted tickets for the Quest Trust Company’s Self-Directed IRA Expo</a></h3> GET TO A SAFE SPOT So if you have to then go ahead and pause it and come back later. You can go to the Private Lender <a href="http://Podcast.com" rel="nofollow" target="_blank">Podcast.com</a> and just sign up anywhere, any sign up form that you see, name an email, fill that out and you will get the private lenders loan application Guide and checklist. And I put it together to kind of walk through a couple of ideas or themes and notions. And I’m going to go through those with you here today. I’ve always said that when it comes to a loan, I like to look at the person a their process and then the property. And that’s what I lay out in this, in this checklist, you want to know how much real estate investing experience they have if they’re just starting off or if they’re new, politely send them over to hard money lenders. That’s what they’re there for is to really help new people, new people, newbies, first-timers, be successful and let them do it with hard money, not yours. LOOK FOR GRAY HAIR That’s, that’s my suggestion. Look for what you’re, you know, if you have a borrow who’s been doing this for 20 years and they’re a flipper and they continue to flip, that’s great. That’s someone you might be comfortable with, especially if you have a good relationship with them. If you have a flipper or let’s say, let’s say you have a landlord who wants to go into flipping that process, I’m not too comfortable with because here’s somebody who has succeeded as or succeeded as a flipper, rehabber and now it’s to switch gears. I’m sorry, I just messed that up. Didn’t I? Someone who’s successful as a landlord, but now they want to switch gears and get some quick cash again. I would send them over to the hard money folks until they get a few flips under their belt. It’s a, it’s a little bit different game and I like to invest with people who know what they’re doing and stay in their lane. So that is a touch on the person you want to know if do they have, what’s the record like in not just a criminal record or any, what was their record as a person do that? Have they been arrested a lot? You know, one or two times. Okay. Or not. I’m saying, okay, but what was the, what were the circumstances behind, do they have judgments against them? Have they been sued? Because here’s it. This is where it gets tricky because I, I’m trying to think of someone who’s landlord for a very long time who at least wasn’t threatened to be sued or contacted by attorneys, by tenants that know how to game the system so to speak. Uh, and I’m not trying to condone slumlords or anything like that. It’s just I know some good people who have been sued, uh, as landlords frivolously, but, um, unfortunately sued nonetheless. BE JUDGMENTAL So if they do have judgments or they have been sued, find out why. You know, are they behind on child support? Uh, you know, what, find out the reason. Do they have lousy credit cause they just got divorced or you know, have they had gone through a really crappy life event? Like, uh, someone getting sick or they themselves getting sick, but also want to note if the person that I’m loaning to has a reputation to uphold in their investing or their real estate investing community, that the, those things kind of help up help you mitigate risk so that when you go into the loan, it’s pretty much a no brainer, but that person is at the end of the day, you’re lending to a person. Yes, there’s a deal, there’s a property, but at the end of the day there’s a person and that’s where I think you should, you should start with at least that’s where I do and their process, like I said, what do they do? Are they, you know, is this their 100th rehab flip or is this their 32nd rental property? Then you know, I have a comfort level with that. And then you look at the property and is it a, is it a property class that you’re comfortable? Is it single family is a multi, as a small multi, what is the deal? Most of this is going to be geared towards single family. This checklist that I’ve provided and the guide is loans towards single family. In the future I will have other property classes, but for now this is where I’m trying to follow the, the, the model of most people get into single family and then move on up. I’m trying to do the same thing with this podcast and with the checklist and guides and stuff like that. So, um, this is all going to be geared towards a single family flip or it could be an owner finance deal or it could be a landlord, a buy and hold, but you get to the last page and there’s basically the checklist. WHO IS THE BORROWER? Who’s the borrow? Who are they, what’s their experience? I like to see some type of portfolio of what they’ve done in a, an an investor profile. So basically what that means in what type of portfolio do they have, how can they demonstrate their experience? Can they show me some HUD statements, a loan application, a loan request applicant fill up, fill out an application, get the basics from them. If you’re lending to an entity, you definitely want to get the formation documents for the entity. Articles of incorporation, uh, another to DBA organization. Who are the players who’s involved under that name of, you know, real estate investor LLC. And for every individual that’s a member of the LLC or for every individual that I loan to, I asked for a copy of the driver’s license and social security card just in case. That’s kind of my little insurance policy. I wouldn’t want a loan without knowing exactly having a state number or a federal number to attract these people down in case the worst does ultimately end up happening that way it’s, you know, you don’t run, you don’t necessarily have to run credit right off the bat. I like to let them do it through, uh, something that doesn’t Ding them on their credit, like Credit Karma or one of those sites. However, if things do go south, I’m going to be ready to act quick. And if I have a social security card and a driver’s license, I can do so. The other option or let’s the [inaudible] option when I’m looking. The other thing, when it comes to the borrowers, can they repay the loan as agreed? You know, do they have enough reserves? Are they a full time real estate investor? If they’re not, if they’re, you know, if they have a full time job, then let’s, if they say, look, I like to request pay stubs just to see if the people are telling the truth. Most recent tax return as well helps out. It gets complicated with when people leave corporate world and can become a real estate investor because now they’re on bankable. So I want to see why they’re unbankable. I want to see that to prove that they’re in bankable. Uh, that helps me feel a little, you know, a little better with a person, especially if I don’t know them that well. But I tend to loan to people I know. Not always, but I tend to. So you can also look for bank statements. I look for business and personal as well. I want to see if, if the cost, if the cost of the loan is going to cost, the price of the loan is going to cost them $5,000 for let’s say for a rehab flip. I want to make sure they’ve got the five grand ready to go and you know, and they can pay some draws up front. I love to see that brick construction draws. They’re ready to go. They’ve got money, so they’ll pay the contractors. Then they request a draw from me, so I’ll send out the inspector. They check it off, boom. We can wire the money, uh, usually within 24 hours to replenish the borrower’s bank account and to continue the, the Rehab of the property. I like to see additional personal assets, investments in investment properties. Again, back to the portfolio of the real estate investment experience. They have 401k’s four oh three bs pension stocks, bonds, mutual funds, whatever. Fidelity, Schwab, do they have cash if, if something goes south, do they have cash to make their lender whole? In the meantime, that’s what I want to see. <h3><a href="http://privatelenderpodcast.com/expo/" rel="noopener nofollow" target="_blank">Get your discounted tickets for the Quest Trust Company’s Self-Directed IRA Expo</a></h3> I also want to have them execute a business loan disclosure, which basically says this loan is for a non owner occupant. This is a business loan to an investor. That investor cannot spend any time habitate the occupier habitate that property other than to fix it up, sell it or to lease it out to someone else. But that person, the person I’m loaning the money to cannot use that house as a residence because now that becomes a retail loan or a consumer loan and the rules change and the consumer’s protected much more than the business folks because the government and the laws basically assume if you’re doing business and you should know what you’re doing. And we all know that predatory lending does exist to certain folks and we saw it in the last downturn. So I always want to make sure they get, and I get an executed business loan disclosure so they know that they’re not allowed to live in the property. BEWARE OF OWNER OCCUPANTS – THERE ARE DIFFERENT RULES! If they do want to live in a property, that’s fine, but there’s a whole other avenue to go down, which this checklist doesn’t cover. So just want to tell you about them. Now on the property, I want to see the earnest money contract with all addendums and or assignments. I like to get local neighborhood statistics and I don’t necessarily require that from the the borrower. I hope that they have some of that in their due diligence in their package that they present and some of the documentation that they present to me. But you know you can make money in and high crime areas, you can make money in low crime areas. It just depends on what you like. I know people who buy houses for $20,000 lease them out and don’t have any contracts with people. It’s month to month and they pretty much know that at some point they’re going to, they’re going to have to evict and so they, they plan for it. It’s not type of investing I want to do, but maybe it is something that maybe your one of your bars want to do and they’re comfortable with that and they know that there’s good money, there’s good cashflow in those types of properties if you know how to manage them. And if you get someone who can manage, operate, and manage them good, that are well then for the lender you’ll never even know as long as they make their payments and your pain is agreed to. Everything is fine. I like to see a scope of repair and or the bids, I want to see it all. I want to see who’s coming out to the property. Who’s, you know, is it their cousin who lays tile just throwing out some random numbers or is it, do they have a contractor that’s come out and said, okay, you want to flip or whatever. PRIVATE LENDER’S LOAN APPLICATION AND CHECKLIST This is what we’re going to do to get it to a habitable condition. This is what it’s going to cost. Does the scope of repairs do the repairs? Are they, are they appropriate for the neighborhood? That’s why I was allowed to look at the comps a as well, but don’t get, don’t get your comps from the borrower because they’re gonna, they’re gonna put lipstick on that pig. You go get your own comps or rely on the the appraiser. I also want to have permission to visit or inspect the property and access lockbox code or whatever that’s for local. Like I said, I start off, um, if you’re new, I suggest you start local before you cross county lines or state lines, but be able to go touch and see, smell the property that you’re, you’re investing in and putting money on first. So I want permission. Just because I’m the lender doesn’t mean I can go to the property whenever I want. So I like to get permission. I also like to see a recent survey, the subject property I want to, I didn’t know that something is, is recent. When I say like, you know, five years is a, what I would consider fairly recent. As long as nothing has been constructed, torn down or anything else like that. Uh, I mentioned appraisal. You want to get your appraisal, you want to get an or a CMA, broker price opinion, something. I like to do my own comps. I’d like to dig into them. And usually appraisers will give links into your mls system that you can drill down into the photos and look at the, the furnishings and the treatments or the, sorry, the finishes on the property so that you’re, you’re not providing a, a retail loan or providing a loan to somebody who’s going to go into a house and put four mica or laminate countertops when the rest of the neighborhood is marvel. Vice versa. You don’t want to put marble in a neighborhood that everything else is going to be laminated. Do you want to know what’s around and make sure that your investor, your borrower is keen on that and that they’re not going to over or under serve the property. <h3><a href="http://privatelenderpodcast.com/expo/" rel="noopener nofollow" target="_blank">Get your discounted tickets for the Quest Trust Company’s Self-Directed IRA Expo</a></h3> Yeah. And it goes without saying. You’re going to get a copy of clear title commitment and the closer contact info. And then there’s the insurance policies. And what happens is you get binders a so the policies won’t incept until the day of closing. So you yourself won’t have the policy. But they insurance companies give what’s called a binder where they will say, okay, a upon closing this property insurance will be in place. Same thing. You definitely going to get a lender’s title policy for the full amount of your loan to make sure that you’re made whole in case, God forbid something happens. Okay. I want to see that evidence of property hazard insurance or the binder and the limits must be no less than 100% of the ARV and or anticipated listing price. And if it’s going to be a short term, I like, I like to see where it is going to be at least a six month policy put in place or some type of short term policy. I don’t mind lenders only getting a few, sorry. Borrowers only getting a few months of insurance when they’re going to be flipping a house and turning it fairly quickly. But while they do own it and while my money’s on that house, I want to make damn sure that they’ve got some, some property insurance hazard insurance there. And because I live in the Houston area now, I require um, flood insurance through FEMA, a national flood insurance program. It’s still dirt cheap, cheapest insurance there is out there. And a lot of people don’t understand that homeowner’s or landlord policies, dwelling policies do not cover flood from a hurricane or a river. They don’t cover flood at all. INSURANCE IS NON-NEGOTIABLE I like to see, like I said, I want to see those binders ready to go. I want to see what those limits of the policies are gonna be. Just so that, you know, they’ll say simple math and ARV of a house is going to be a hundred grand and I’m loaning 50 on it. I want to make sure that if anything I think burns down that I like to see the a hundred grand there because the limit of a hundred grand for the ARV, not including the property because what I’ll probably should do an old episode on this, but there’s something called the Co insurance clause, which I believe I spoke about last episode. Okay. But if you don’t ensure at least 80 or 90% of the ARV or what the true property value is, if there is a claim, then the insurance companies will deduct, or you only get, say, let’s say if you insure $100,000 house for 50,000 and you completely get wiped out. Let’s say a hurricane comes through or a tornado and that hundred thousand is out, but you’ve put limits on for 50 all you get is 50 so if you’re the lender, maybe you get paid back. If you put 50 if you’re down, you know, if you’re only in there for fit 50 50 grand. Where it really bites is, let’s say that $100,000 home has a, and the borrower has only put a $50,000 limit or 50% of the value on insurance. Then there’s a $50,000 claim. Half of that house is damaged and has to be rebuilt. It’ll insurance is only going to pay for half of it. That will pay according to the percentage of value that you insured. So that’s why I say, you know, get 100% of the ARV value, protects you, protects the borrower, and it’s just the next room, a little, a little cushion, so to speak in a, and we’re trying to keep the, trying to keep your money safe. So if you want to go get your private lenders loan application Guide and checklist, again, go to private Leonard, <a href="http://podcast.com" rel="nofollow" target="_blank">podcast.com</a> and I’ve, um, I’m, I’m experimenting with this little pop up so that when it looks like you’re gonna leave the page, it’ll pop up and it’s a, it’s got all the wrong copy and everything on it, but I, uh, I’m going to try to change it here shortly, uh, but I just wanted to get it out there and get it into people’s hands and I like to know what you think about it. <h3><a href="http://privatelenderpodcast.com/expo/" rel="noopener nofollow" target="_blank">Get your discounted tickets for the Quest Trust Company’s Self-Directed IRA Expo</a></h3> <h3></h3> <h3>Important Links:</h3> <ul> <li><a href="http://www.PrivateLenderPodcast.com/Expo" rel="noopener external noreferrer nofollow" target="_blank">PrivateLenderPodcast.com/expo</a></li> <li><a href="https://www.biggerpockets.com/users/KeithB102" rel="noopener external noreferrer nofollow" target="_blank">BiggerPockets</a> – Keith...</li></ul>

PLP-078 Loan Application Guide & Checklist

What You Will Earn on this Episode: One of the most frequent questions I receive is:  “how much money do I need to become a private lender?”  The person asking the question will then go to qualify this question by saying they don’t have a big IRA, they don’t have any 401k’s that they can roll over, and they don’t have a large sum of inherited cash.  How does a person get started if they’re darn near broke? While you absolutely need to save up a sum of money in order to lend it out to others, a small amount of money shouldn’t discourage you from becoming active and involved in Private Lending.    Obviously the more money you have to lend, the larger your pool of options will be, but just remember this:  Everybody has to start somewhere 3 Key Points to Consider: 1 – You can begin lending with just a few thousand dollars 2 – A way to determine if your employer would allow you roll over a portion of your retirement plan (401k, 403b, etc), while still being employed:  an In-Service Distribution/Withdrawal. 3 – If you don’t have much to lend, your primary concern should not be the interest rate and amount of money you potentially earn, but rather building your network, and therefore building your Net Worth. Don’t forget, you can find certain key words and phrases at the Glossary of Terms   SPECIAL OFFER!! Get 25% off your Quest IRA Expo tickets with promo code:  BakerExpo Click the image below to purchase your tickets!  Don’t forget to email any questions to info@privatelenderpodcast.com   Be sure to attend the next meeting of. . . . . . 713 REIA Hosted by Landon Rothstein &amp; Ray Sasser Where Deals Get Done!     Please donate to the Texas 100 and make sure owner finance rights are understood and upheld!  Click Link Below!!  “OUR voices must be heard at the State and Federal levels!” – Texas 100

What You Will Earn on this Episode: One of the most frequent questions I receive is:  “how much money do I need to become a private lender?”  The person asking the question will then go to qualify this question by saying they don’t have a big IRA, they don’t have any 401k’s that they can roll over, and they don’t have a large sum of inherited cash.  How does a person get started if they’re darn near broke? While you absolutely need to save up a sum of money in order to lend it out to others, a small amount of money shouldn’t discourage you from becoming active and involved in Private Lending.    Obviously the more money you have to lend, the larger your pool of options will be, but just remember this:  Everybody has to start somewhere 3 Key Points to Consider: 1 – You can begin lending with just a few thousand dollars 2 – A way to determine if your employer would allow you roll over a portion of your retirement plan (401k, 403b, etc), while still being employed:  an <a href="http://privatelenderpodcast.com/glossary/" rel="noopener nofollow" target="_blank">In-Service Distribution/Withdrawal</a>. 3 – If you don’t have much to lend, your primary concern should not be the interest rate and amount of money you potentially earn, but rather building your network, and therefore building your Net Worth. Don’t forget, you can find certain key words and phrases at the <a href="http://privatelenderpodcast.com/glossary/" rel="noopener nofollow" target="_blank">Glossary of Terms</a> SPECIAL OFFER!! Get 25% off your Quest IRA Expo tickets with promo code:  <a href="https://questira.lpages.co/quest-expo/" rel="noopener external noreferrer nofollow" target="_blank">BakerExpo</a> Click the image below to purchase your tickets! <a href="https://questira.lpages.co/quest-expo/" rel="noopener external noreferrer nofollow" target="_blank"></a> Don’t forget to email any questions to <a href="mailto:info@privatelenderpodcast.com" rel="noopener">info@privatelenderpodcast.com</a> Be sure to attend the next meeting of. . . . . . <h1><a href="https://www.meetup.com/713-Houston-Area-Real-Estate-Investor-Network/" rel="external noopener noreferrer nofollow" target="_blank">713 REIA</a></h1> Hosted by Landon Rothstein &amp; Ray Sasser Where Deals Get Done! Please donate to the Texas 100 and make sure owner finance rights are understood and upheld!  Click Link Below!! <a href="https://texas100.org/" rel="noopener external noreferrer nofollow" target="_blank"></a> <a href="http://privatelenderpodcast.com/plp-023/" rel="noopener nofollow" target="_blank">“OUR voices must be heard at the State and Federal levels!” – Texas 100</a>

PLP-027 – How much money is needed to become a Private Lender?

Working remotely in the USA from anywhere in the world is the new normal. Michelle Green is a professional real estate investor, ex-property Lawyer and Realtor/Real Estate who works virtually in Texas, USA from her home in New Zealand. In 2016, with her father Steve, she founded the Koru Group which specializes in seller financing homes to retail buyers and investors who are not currently able to qualify for conventional financing. Steve and Michelle share how they first got started dabbling in real estate, how they moved their real estate operation to Texas, USA, private lending, and how to find private lenders from 8,000 miles away. This dynamic father/daughter duo of Steve and Michelle Green is inspiring to say the least! — Listen to the podcast here: Using Private Money From 8,000 Miles Away with Steve and Michelle Green This Dynamic Father/Daughter Duo Is Suffocating ALL Excuse It’s my mission to create private lenders and to create a community where people just like you and I can safely and confidently invest and build wealth with old world values and pragmatism and without banks or Wall Street. 2019 has started off to be a very international year at the show where we had Victor Menasce from Canada and now, I have very distinct honor to interview a father and daughter powerhouse all the way from New Zealand. Steve and Michelle Green live almost 8,000 miles away and yet they have found a way to invest in single-family homes real estate here in the United States. I find their story fascinating and very interesting. I believe that you the Lender Nation will as well. When I think of all the excuses I gave in the past as to why I was or wasn’t doing something, mostly why I wasn’t doing something. It’s too hard. I don’t have the time. I don’t have the money or whatever the case may be, I get a sense of shame now when I think back on it. I don’t think it’s uncommon among investors and it’s not necessarily a bad thing unless you let it ruin you or run you. It’s a good thing if we can find motivation in those emotions. I certainly find it there. I heard this thing about you should never compare yourself to another as we go around and we journey around the sun through life. After hearing how our guest is investing in real estate in Texas all the way from New Zealand, I feel downright lazy. Because Steve and Michelle Green and negating all the excuses, mine, yours, everybody’s for not putting in the hustle and getting things done. Veering out of way and making it happen. This dynamic father and daughter investing duo tell us how they do it. They shared it with us and I’m forever grateful. — I’m honored to be interviewing Steve and Michelle Green all the way in New Zealand. Steve and Michelle, welcome to the Private Lender Podcast. Thank you very much. It’s a pleasure to be here. When I started this podcast, it was back in April or May. Somebody reached out on LinkedIn. It was this fellow named Steve Green and I didn’t realize the significance at the time, but in August of 2018, we met at the Quest IRA Expo and Steve said, “This is my daughter Michelle and we were investing in the Southern United States.” I said, “You don’t sound like you’re from Houston or Dallas. How is it that you guys have come and invested in the United States? We caught up before you left and thank you for lunch. I was jumping at the bit to have you guys come on because your story is absolutely fascinating and I can’t wait for you to tell it to the audience. We were investing here in New Zealand for various reasons. Our portfolio’s top properties weren’t performing as well as it should have been. The government here is getting very difficult for landlords, so we started looking further afield. In 2012, I decided to go to Sacramento on a hard money lenders course. While I was there, I met a lot of wholesalers doing reasonably well for themselves and that prompted an interest in getting involved in the States. Few things happened after that. In 2014, I started to get interested. We sold our portfolio in New Zealand altogether, got out of it and we started to market in 2015 to see if we could find any properties in Florida. I always wanted to work in Texas. I knew several people that were working in San Antonio and Houston and it looked like a great market to be, but there was something in my research that said, “Go to Jacksonville, Florida. That’s the market to be in.” We started looking around at how we could do this. We put out some mailers and some Facebook ads, bits and pieces, generally dipping our toes in the water while everybody here was saying, “You can’t do that. It cannot be done.” Steve Green being Steve Green, when somebody tells me I can’t do it, I go out to prove that they’re wrong. In late 2015, we came across a couple in Florida who were at the same level as we were. They are very new. They wanted to get involved but didn’t know how they could do it. We had a chat and we said, “What about if we do the marketing? We’ll find and screen the sellers. They won’t bring the deals to you. You can close the deals over there.” That seemed to work. The first year, we closed eighteen deals between the two of us. That’s what got us rolling. The thing it Texas evolved when we decided that we were at such a level that we could go to where we wanted to invest and not where we had to invest. We wished the other couple very well and we came over to Texas in August. I spent three months there. I met you at Quest Expo and the rest is history. I’m jealous that you’re able to take that much time spending in another country. You’re working, you’re not sitting on the beach sipping Mai Tai’s. You’re out there networking. We were analyzing it when we go back. We decided that we had three days off the entire time we were there. They weren’t really days off. We still did a bit of work. Private lenders are forward-thinking peopleClick To Tweet I’d like to talk about your backgrounds a little bit because a lot of questions I get are people think that they don’t have a background in say construction or lending or anything else. I really want to show that it’s going to take work. You can’t snap your fingers and be done. If you could go into your background because I love the different sides of it and how you guys wedge it and come together and invest. I got dragged along. I don’t know how it happened. I just know that dad gave me a book when I was about fifteen or sixteen years old and it was Rich Dad Poor Dad. I read it and something in it resonated with me. The idea of having a business that can work for you so that you can go and do the things that you want in life started to appeal to me. By that stage, I’d already gone quite a way through my education and I knew that I wanted to go off to university and study Law. I went away and I did that. While I was there, I found myself dabbling in real estate all the time. It was around about the time that mom and dad started buying the investment properties over here. I’ll never forget I went to a seminar or a one-day course type thing in Christchurch. I must have spent something like $500 to get there. Then I ended up purchasing a course and I got absolutely sucked along into it. I came out of it in the other end thinking that the course was an absolute waste of money, but this is something that I like to spend some more time doing. I started to develop an interest in real estate and I eventually ended up getting my real estate salesperson certificate here in New Zealand and working for a real estate agency. Then I got into law and started practicing property law. I was doing that for a good four or five years, on and off, both here and in Australia. I enjoyed doing the property law stuff, but I always wanted to start my own business and I found myself becoming guided by dad. Before we knew where we were, he hooked me in on the premise of he had shoulder surgery and he said that he needed somebody to help him while he had his surgery. It just snowballed from there. It’s a great field to be in for sure. I remember when we met, I was like, “You’re an attorney,” and you were like, “I want to get out of it.” I’m like, “Why?” but I understand completely. It’s such a stressful world being an attorney. I was going to work every day taking onboard everybody else’s problems. I thought, “If I can solve everyone else’s problems, then why don’t I put that to some better use and get into a business where I can start solving our own problems.” Private Lending: If you can solve someone else’s problems, then why don’t you put that to some better use?   How about you, Steve? Did you get a law background? No. She does the contract. She looks over the legal documents. That’s my background. I started off life as an electrician. I had a great boss at the time. There were three of us were working in a small workshop out in England. He kept telling me, “Go self-employed. I said, “I don’t want to do that.” Then one day he said to me, “If you don’t come in on Monday and be self-employed,” he said I’ve got no work. I thought he was kidding. I turned up on Monday and he said, “Show me your ticket.” I said, “I haven’t gotten it.” He said I haven’t got any work. He was serious and I had to go home and I had to call my accountant, my CPA and I turned up and I said, “I’m at work. I’m self-employed.” He said, “I’m going to double your wages immediately.” That was the eye-opener for me into self-employment. He also has had properties and he kept saying to me, “Buy properties.” I just ignored him. The whole time I worked for him, I was like, “That’s not for me.” Every time I went away from the real estate, I kept getting back to it by somebody or something. Eventually when we moved to New Zealand in 1995, we noticed a lot of people were getting involved in it. I started to take a bit of an interest in it, I go to seminars, and whatever. It still didn’t resonate. Then we ended up going back to the UK about three years later and we had an investor buy our property. He came in and he offered us a price that we didn’t want to take. The lifestyle going back to the UK was appealing to my wife more than me and we took that offer. The time that we spent back in the UK, I started to think about this and process it. We ended up coming back out to New Zealand in 2003 and that’s when I started to get into it. In 2008 was when we bought our home and two months later we bought our first rental property. It was as quickly as that and within three months, we bought our second rental property. It snowballed and we got interested. The market here wasn’t great, but we were into that situation. When the US things started to happen for us, we were keen on learning everything, but it came down to what could we do to support ourselves and to get where we want it to be? We quickly came to the realization that there was no way we wanted to own rental properties with all the issues that we face here. There are some great property managers out there. There are some great tenants out there trying to bring it all together. We didn’t feel that we wanted to go down that route. In the US, there was so many more opportunities, wholesaling, seller financing, and lease options. There is a whole plethora of things that we could get involved in. We were wholesaling initially in Jacksonville, but when we decided to move into Texas, we decided that we have a crack at lease options. We were listening to various podcast wide and some of the more successful investors. We try to put that together. Somewhere in the middle, after getting all the contracts together, it wasn’t going to be for us. It wasn’t what we were looking for. We were looking for a more long-term strategy that could support us and the seller financing model, being the bank for somebody who can’t get conventional financing. Helping a lot of people along the way. Helping people with retirement funds get some good rates of return on their money. Finding a buyer that cannot get a conventional loan and putting them into a property. It all seemed to make sense for us. That’s where we are now. Things are going to take work. You can't snap your fingers and be done.Click To Tweet There are a ton of questions in there and I can only unpack maybe one or two. One is you know that I’m a big fan of the seller financing option as well. It’s how I got into all this, with my partner Landon and now I’m with the podcast, meeting you guys and everything. It is a great model because to me it’s a true win-win. Life happens and one of the things that I struggle with is even though I’m in America and our healthcare is what it was, you had to pay for it and all this and that. I never thought anyone should lose their house because they got sick. However, I understand if I’m a landlord, I’ve got a contract. I still want to get my money. Life’s not fair. That’s the bottom line, but seller financing coming in and let’s say somebody gets divorced. Even if it’s an amicable divorce, their credit is probably going to be hit pretty bad. They’re going to be unbankable or unmortgageable. It’s happened in my family. My aunt got sick very young and it was a financial burden for about 30 years with her condition and everything. It’s a great way to help people get into properties. I found that people do care if they get a chance. If somebody gives them a chance, they will do their damnedest to make the most of it. Have you found that to be the case? That’s the big thing. When we were dealing with tenants, they don’t care as much about the property they’re living in. I was listening to the radio in the car. They were talking about having pets in rental properties and a woman came on. She said, “I’ll have pets all day long because people generally look out to their pets. What I don’t like are young children because they scratch everything up and they wreck everything.” I thought it was hilarious, but then I looked back and I thought, “The last property that we sold, we had a family of ten in there and the place was trashed,” and she was so right. I thought, “I don’t want to deal with those properties anymore.” People that buy the properties, it’s their property. Do you trash your house? Do I trash mine? No, we don’t. We look after them and these are the kind of people that respect what we’re doing. They appreciate what we’re trying to do for them and they work with us when we’re trying to help them out. If we can get somebody into a property for a similar price to what they would rent their property for, why wouldn’t they do it? You guys are students of Mitch Stephen. I absolutely love him. Private Lending: People buying the properties look after them. They don’t trash their houses.   He’s absolutely right. If you’re going to pay $1,000 in rent, why not pay something similar to that and own it and have equity and have something that you can sell at the end of the time that you’re there. I got into private lending because I found out that I made horrible landlord. I suck and I embrace that. There are great property managers out there. There are great tenants and there are great contractors. I never seem to have all three at the same time, except when I bought my first rental property. There was this amazing tenant in there and she and her husband were building their retirement home. They were waiting it out and didn’t want to spend a whole lot of money in the nice part of town on rent. I had a house and four months into it she wrote me a letter,...

Working remotely in the USA from anywhere in the world is the new normal. Michelle Green is a professional real estate investor, ex-property Lawyer and Realtor/Real Estate who works virtually in Texas, USA from her home in New Zealand. In 2016, with her father Steve, she founded the Koru Group which specializes in seller financing homes to retail buyers and investors who are not currently able to qualify for conventional financing. Steve and Michelle share how they first got started dabbling in real estate, how they moved their real estate operation to Texas, USA, private lending, and how to find private lenders from 8,000 miles away. This dynamic father/daughter duo of Steve and Michelle Green is inspiring to say the least! — <h3>Listen to the podcast here:</h3> <h2>Using Private Money From 8,000 Miles Away with Steve and Michelle Green</h2> <h3>This Dynamic Father/Daughter Duo Is Suffocating ALL Excuse</h3> It’s my mission to create private lenders and to create a community where people just like you and I can safely and confidently invest and build wealth with old world values and pragmatism and without banks or Wall Street. 2019 has started off to be a very international year at the show where we had <a href="http://privatelenderpodcast.com/?s=Victor+Menasce" rel="noopener nofollow" target="_blank">Victor Menasce</a> from Canada and now, I have very distinct honor to interview a father and daughter powerhouse all the way from New Zealand. <a href="https://nz.linkedin.com/in/stevegreen-koruhomes" rel="noopener external noreferrer nofollow" target="_blank">Steve</a> and <a href="https://nz.linkedin.com/in/michelle-green-40365ba6" rel="noopener external noreferrer nofollow" target="_blank">Michelle Green</a> live almost 8,000 miles away and yet they have found a way to invest in single-family homes real estate here in the United States. I find their story fascinating and very interesting. I believe that you the Lender Nation will as well. When I think of all the excuses I gave in the past as to why I was or wasn’t doing something, mostly why I wasn’t doing something. It’s too hard. I don’t have the time. I don’t have the money or whatever the case may be, I get a sense of shame now when I think back on it. I don’t think it’s uncommon among investors and it’s not necessarily a bad thing unless you let it ruin you or run you. It’s a good thing if we can find motivation in those emotions. I certainly find it there. I heard this thing about you should never compare yourself to another as we go around and we journey around the sun through life. After hearing how our guest is investing in real estate in Texas all the way from New Zealand, I feel downright lazy. Because Steve and Michelle Green and negating all the excuses, mine, yours, everybody’s for not putting in the hustle and getting things done. Veering out of way and making it happen. This dynamic father and daughter investing duo tell us how they do it. They shared it with us and I’m forever grateful. — I’m honored to be interviewing Steve and Michelle Green all the way in New Zealand. Steve and Michelle, welcome to the Private Lender Podcast. Thank you very much. It’s a pleasure to be here. When I started this podcast, it was back in April or May. Somebody reached out on LinkedIn. It was this fellow named Steve Green and I didn’t realize the significance at the time, but in August of 2018, we met at the <a href="https://questira.lpages.co/quest-expo/" rel="noopener external noreferrer nofollow" target="_blank">Quest IRA Expo</a> and Steve said, “This is my daughter Michelle and we were investing in the Southern United States.” I said, “You don’t sound like you’re from Houston or Dallas. How is it that you guys have come and invested in the United States? We caught up before you left and thank you for lunch. I was jumping at the bit to have you guys come on because your story is absolutely fascinating and I can’t wait for you to tell it to the audience. We were investing here in New Zealand for various reasons. Our portfolio’s top properties weren’t performing as well as it should have been. The government here is getting very difficult for landlords, so we started looking further afield. In 2012, I decided to go to Sacramento on a hard money lenders course. While I was there, I met a lot of wholesalers doing reasonably well for themselves and that prompted an interest in getting involved in the States. Few things happened after that. In 2014, I started to get interested. We sold our portfolio in New Zealand altogether, got out of it and we started to market in 2015 to see if we could find any properties in Florida. I always wanted to work in Texas. I knew several people that were working in San Antonio and Houston and it looked like a great market to be, but there was something in my research that said, “Go to Jacksonville, Florida. That’s the market to be in.” We started looking around at how we could do this. We put out some mailers and some Facebook ads, bits and pieces, generally dipping our toes in the water while everybody here was saying, “You can’t do that. It cannot be done.” Steve Green being Steve Green, when somebody tells me I can’t do it, I go out to prove that they’re wrong. In late 2015, we came across a couple in Florida who were at the same level as we were. They are very new. They wanted to get involved but didn’t know how they could do it. We had a chat and we said, “What about if we do the marketing? We’ll find and screen the sellers. They won’t bring the deals to you. You can close the deals over there.” That seemed to work. The first year, we closed eighteen deals between the two of us. That’s what got us rolling. The thing it Texas evolved when we decided that we were at such a level that we could go to where we wanted to invest and not where we had to invest. We wished the other couple very well and we came over to Texas in August. I spent three months there. I met you at Quest Expo and the rest is history. I’m jealous that you’re able to take that much time spending in another country. You’re working, you’re not sitting on the beach sipping Mai Tai’s. You’re out there networking. We were analyzing it when we go back. We decided that we had three days off the entire time we were there. They weren’t really days off. We still did a bit of work. Private lenders are forward-thinking people <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-057/&amp;text=Private%20lenders%20are%20forward-thinking%20people&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> I’d like to talk about your backgrounds a little bit because a lot of questions I get are people think that they don’t have a background in say construction or lending or anything else. I really want to show that it’s going to take work. You can’t snap your fingers and be done. If you could go into your background because I love the different sides of it and how you guys wedge it and come together and invest. I got dragged along. I don’t know how it happened. I just know that dad gave me a book when I was about fifteen or sixteen years old and it was <a href="https://www.amazon.com/Rich-Dad-Poor-Teach-Middle/dp/1543626610" rel="noopener external noreferrer nofollow" target="_blank">Rich Dad Poor Dad</a>. I read it and something in it resonated with me. The idea of having a business that can work for you so that you can go and do the things that you want in life started to appeal to me. By that stage, I’d already gone quite a way through my education and I knew that I wanted to go off to university and study Law. I went away and I did that. While I was there, I found myself dabbling in real estate all the time. It was around about the time that mom and dad started buying the investment properties over here. I’ll never forget I went to a seminar or a one-day course type thing in Christchurch. I must have spent something like $500 to get there. Then I ended up purchasing a course and I got absolutely sucked along into it. I came out of it in the other end thinking that the course was an absolute waste of money, but this is something that I like to spend some more time doing. I started to develop an interest in real estate and I eventually ended up getting my real estate salesperson certificate here in New Zealand and working for a real estate agency. Then I got into law and started practicing property law. I was doing that for a good four or five years, on and off, both here and in Australia. I enjoyed doing the property law stuff, but I always wanted to start my own business and I found myself becoming guided by dad. Before we knew where we were, he hooked me in on the premise of he had shoulder surgery and he said that he needed somebody to help him while he had his surgery. It just snowballed from there. It’s a great field to be in for sure. I remember when we met, I was like, “You’re an attorney,” and you were like, “I want to get out of it.” I’m like, “Why?” but I understand completely. It’s such a stressful world being an attorney. I was going to work every day taking onboard everybody else’s problems. I thought, “If I can solve everyone else’s problems, then why don’t I put that to some better use and get into a business where I can start solving our own problems.” Private Lending: If you can solve someone else’s problems, then why don’t you put that to some better use? How about you, Steve? Did you get a law background? No. She does the contract. She looks over the legal documents. That’s my background. I started off life as an electrician. I had a great boss at the time. There were three of us were working in a small workshop out in England. He kept telling me, “Go self-employed. I said, “I don’t want to do that.” Then one day he said to me, “If you don’t come in on Monday and be self-employed,” he said I’ve got no work. I thought he was kidding. I turned up on Monday and he said, “Show me your ticket.” I said, “I haven’t gotten it.” He said I haven’t got any work. He was serious and I had to go home and I had to call my accountant, my CPA and I turned up and I said, “I’m at work. I’m self-employed.” He said, “I’m going to double your wages immediately.” That was the eye-opener for me into self-employment. He also has had properties and he kept saying to me, “Buy properties.” I just ignored him. The whole time I worked for him, I was like, “That’s not for me.” Every time I went away from the real estate, I kept getting back to it by somebody or something. Eventually when we moved to New Zealand in 1995, we noticed a lot of people were getting involved in it. I started to take a bit of an interest in it, I go to seminars, and whatever. It still didn’t resonate. Then we ended up going back to the UK about three years later and we had an investor buy our property. He came in and he offered us a price that we didn’t want to take. The lifestyle going back to the UK was appealing to my wife more than me and we took that offer. The time that we spent back in the UK, I started to think about this and process it. We ended up coming back out to New Zealand in 2003 and that’s when I started to get into it. In 2008 was when we bought our home and two months later we bought our first rental property. It was as quickly as that and within three months, we bought our second rental property. It snowballed and we got interested. The market here wasn’t great, but we were into that situation. When the US things started to happen for us, we were keen on learning everything, but it came down to what could we do to support ourselves and to get where we want it to be? We quickly came to the realization that there was no way we wanted to own rental properties with all the issues that we face here. There are some great property managers out there. There are some great tenants out there trying to bring it all together. We didn’t feel that we wanted to go down that route. In the US, there was so many more opportunities, wholesaling, seller financing, and lease options. There is a whole plethora of things that we could get involved in. We were wholesaling initially in Jacksonville, but when we decided to move into Texas, we decided that we have a crack at lease options. We were listening to various podcast wide and some of the more successful investors. We try to put that together. Somewhere in the middle, after getting all the contracts together, it wasn’t going to be for us. It wasn’t what we were looking for. We were looking for a more long-term strategy that could support us and the seller financing model, being the bank for somebody who can’t get conventional financing. Helping a lot of people along the way. Helping people with retirement funds get some good rates of return on their money. Finding a buyer that cannot get a conventional loan and putting them into a property. It all seemed to make sense for us. That’s where we are now. Things are going to take work. You can't snap your fingers and be done. <a href="https://twitter.com/intent/tweet?url=http://privatelenderpodcast.com/plp-057/&amp;text=Things%20are%20going%20to%20take%20work.%20You%20can%27t%20snap%20your%20fingers%20and%20be%20done.&amp;related" rel="noopener noreferrer nofollow" target="_blank">Click To Tweet</a> There are a ton of questions in there and I can only unpack maybe one or two. One is you know that I’m a big fan of the seller financing option as well. It’s how I got into all this, with my partner Landon and now I’m with the podcast, meeting you guys and everything. It is a great model because to me it’s a true win-win. Life happens and one of the things that I struggle with is even though I’m in America and our healthcare is what it was, you had to pay for it and all this and that. I never thought anyone should lose their house because they got sick. However, I understand if I’m a landlord, I’ve got a contract. I still want to get my money. Life’s not fair. That’s the bottom line, but seller financing coming in and let’s say somebody gets divorced. Even if it’s an amicable divorce, their credit is probably going to be hit pretty bad. They’re going to be unbankable or unmortgageable. It’s happened in my family. My aunt got sick very young and it was a financial burden for about 30 years with her condition and everything. It’s a great way to help people get into properties. I found that people do care if they get a chance. If somebody gives them a chance, they will do their damnedest to make the most of it. Have you found that to be the case? That’s the big thing. When we were dealing with tenants, they don’t care as much about the property they’re living in. I was listening to the radio in the car. They were talking about having pets in rental properties and a woman came on. She said, “I’ll have pets all day long because people generally look out to their pets. What I don’t like are young children because they scratch everything up and they wreck everything.” I thought it was hilarious, but then I looked back and I thought, “The last property that we sold, we had a family of ten in there and the place was trashed,” and she was so right. I thought, “I don’t want to deal with those properties anymore.” People that buy the properties, it’s their property. Do you trash your house? Do I trash mine? No, we don’t. We look after them and these are the kind of people that respect what we’re doing. They appreciate what we’re trying to do for them and they work with us when we’re trying to help them out. If we can get somebody into a property for a similar price to what they would rent their property for, why wouldn’t they do it? You guys are students of <a href="https://twitter.com/mitch_stephen?lang=en" rel="noopener external noreferrer nofollow" target="_blank">Mitch Stephen</a>. I absolutely love him. Private Lending: People buying the properties look after them. They don’t trash their houses. He’s absolutely right. If you’re going to pay $1,000 in rent, why not pay something similar to that and own it and have equity and have something that you can sell at the end of the time that you’re there. I got into private lending because I found out that I made horrible landlord. I suck and I embrace that. There are great property managers out there. There are great tenants and there are great contractors. I never seem to have all three at the same time, except when I bought my first rental property. There was this amazing tenant in there and she and her husband were building their retirement home. They were waiting it out and didn’t want to spend a whole lot of money in the nice part of town on rent. I had a house and four months into it she wrote me a letter,...

PLP-057 Using Private Money From 8,000 Miles Away with Steve and Michelle Green

Learn the answer to one of questions I am asked the most:  Where do I find Private Lenders? Episode 30 Quote of the Day: “Money is usually attracted, not pursued.” – Jim Rohn WHAT YOU’LL EARN ON THIS EPISODE: The Usual Suspects of Money Sources 1 – Hard Money Lenders (seriously, they can be an amazing asset to a fledgling investor) 2 – Banks:  Mortgage, Biz Loan, HELOC, signature loan, portfolio 3 – Family and Friends (Are you sure about this? – Caveat Emptor) 4 – Social Functions – (Highly Recommended)  Real Estate Investment Association (REIA) meetings Meet Up groups Self-Directed IRA custodian events Mentor/Coach sponsored events Nationwide Guru Seminars (think Ron LeGrand, Robert Kiyosaki, Than Merrill, etc the Private Lender Podcast events (COMING SOON!!)    SPECIAL OFFER!! Get 25% off your Quest IRA Expo tickets with promo code:  BakerExpo Click the image below to purchase your tickets!    Be sure to attend the next meeting of. . . . . . 713 REIA Hosted by Landon Rothstein &amp; Ray Sasser Where Deals Get Done!   Please donate to the Texas 100 and make sure owner finance rights are understood and upheld!   Click the Image/Link Below!!

Learn the answer to one of questions I am asked the most:  Where do I find Private Lenders? Episode 30 Quote of the Day: “Money is usually attracted, not pursued.” – Jim Rohn WHAT YOU’LL EARN ON THIS EPISODE: The Usual Suspects of Money Sources 1 – Hard Money Lenders (seriously, they can be an amazing asset to a fledgling investor) 2 – Banks:  Mortgage, Biz Loan, HELOC, signature loan, portfolio 3 – Family and Friends (Are you sure about this? – Caveat Emptor) 4 – Social Functions – (Highly Recommended) <ul> <li>Real Estate Investment Association (REIA) meetings</li> <li>Meet Up groups</li> <li><a href="https://questira.lpages.co/quest-expo/" rel="noopener external noreferrer nofollow" target="_blank">Self-Directed IRA custodian events</a></li> <li>Mentor/Coach sponsored events</li> <li>Nationwide Guru Seminars (think Ron LeGrand, Robert Kiyosaki, Than Merrill, etc</li> <li>the Private Lender Podcast events (COMING SOON!!)</li> </ul> SPECIAL OFFER!! Get 25% off your Quest IRA Expo tickets with promo code:  <a href="https://questira.lpages.co/quest-expo/" rel="external noopener noreferrer nofollow" target="_blank">BakerExpo</a> Click the image below to purchase your tickets! <a href="https://questira.lpages.co/quest-expo/" rel="noopener external noreferrer nofollow" target="_blank"></a> Be sure to attend the next meeting of. . . . . . <h2><a href="https://www.713reia.com/" rel="noopener external noreferrer nofollow" target="_blank">713 REIA</a></h2> Hosted by Landon Rothstein &amp; Ray Sasser Where Deals Get Done! <h2>Please donate to the Texas 100 and make sure owner finance rights are understood and upheld! </h2> Click the Image/Link Below!!

PLP-030 How to find private lenders

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